formulate and test a model for the demand of money in australia

1. Project Proposal: The proposal should be a short preliminary report (not more than 4-5 pages) about how you are going to tackle the main project (double spaced, size 12 font). 2. Project: For the actual project, students are to write an essay containing their theory and applied research, with a word limit of 2000 words (not more than ten pages) on the following topic. 'Formulate and test a model of the demand for money in Australia'. Ø You must use the relevant data from the MDAT2017 file that you have for this unit. You do not need to source additional data. Ø Some issues that you may wish to consider: Ø Empirically, what is money? Ø What variables affect the demand for money, and what are the different theories about the determinants of the demand for money? Ø Do we actually observe the demand for money? What is the role of economic theory here? What assumptions are you making about the money market? Ø There are numerous further issues to consider ‑ functional form, the dynamics of the relationship, specification problems, the statistical adequacy of your model, its theoretical adequacy and so on. Ø In addition to the 10 page limit for this project, you must include the following three pages attached the end of your project: printout of your regression results; printout of your graph for heteroscedasticity; printout of your autocorrelation function. you will require a microfit program. please download the freeware at this link. [login to view URL] [login to view URL]