Language and Social Class in Demirciler - 1208 Words

In the Life in a Turkish Village, Joe E. Pierce discusses the culture of the village, Demirciler, located in Turkey. He studies the social structure, the religious practices, the political system, and other aspects of this village’s culture. In his ethnography, Pierce expounds on the societal segregation of the men and women and its translation into social class. While the separation of both genders is prominent in the societal practices, it is also reflected in their native tongue. To demonstrate the relationship between language and social class, I will analyze and review how the Turkish language of Demirciler is a linguistic representation of the social structure with a thorough examination of the societal practices and a semantic†¦show more content†¦This hypothesis can be applied to the native tongue of Demirciler. In the Turkish language, Pierce notes, â€Å"Men and women are labeled differently for relatives older than ego, but not for those younger† (Pi erce 81). Ego’s uncles of his father’s lineage are referred to as amca and Ego’s aunts of his father’s lineage are referred to as hala. Ego’s uncles of his mother’s lineage are called dayz, while aunt’s on his mother’s side are called teyze (Pierce 80). Ego’s grandfathers are both referred to as dede and his grandmothers are both called ebe. Because these kin terms individually identify the male and female members of the family readers gain insight into the citizens’ perspective and can comprehend their view on the social status of men and women. This kinship terminology also illustrates that social status is defined by not only sex, but age as well. While males and females have different kin terms, this only applies to members of an older generation. The gender of young children is not specified in the Turkish language; there is one term used to identify young children: kardes. If Ego had older brothers and siste rs, they would be recognized by separate terms, however, if Ego had younger siblings they would be labeled by the same kin term. Pierce sates, â€Å"The kinship terms illustrate . . . the sharp distinction between males and females as well as the sharp

Congressional Review Paper - 762 Words

Congressional Review For Gibson Southern’s 2017 Mock Congress assignment I was given bill numbers two and eleven. Bill two was â€Å"A Bill to Incentivize a Shift to Green Energy by Increasing Investments in Nuclear Energy†. Bill eleven was â€Å"A Resolution to End Tax Exemptions for Religious Institutions†. I was a member of the Gold Party, therefore, I was for bill eleven and opposing bill two. I started my research on bill two first, because I believed it would be easy to persuade my classmates against passing it due to the factual and moral argument potential of this bill. I began my research trying to appeal to the senators’ emotional sides. I did this by researching the Chernobyl disaster. In 1986 a nuclear power plant in Chernobyl,†¦show more content†¦I was able to use a another shocking statistic from the bill, the government loses 70 billion dollars in tax subsidies every year due to these exemptions. This was an important piece for m e because it provided the shock value of facts, but was also the base for the moral argument that the United States could improve the lives of their citizens with the extra money. My next argument was perhaps the most important, I used the constitution to create a feeling of American responsibility. Tax exemptions for churches violate the separation of church and state that was outlined in the first amendment if the United States constitution (â€Å"Should Churches (defined as Churches, Temples, Mosques, Synagogues, etc.) Remain Tax-Exempt?†). Overall, I was very happy with my argument and believed it to be effective. However, bill eleven did not pass, I was extremely disappointed. I don’t consider my argument a failure, by the tally of votes I knew I had persuaded members of the opposing party to vote to pass my bill. I enjoyed experiencing the bill-to-law process. Hearing the different sides and viewpoints on the bills was interesting. Seeing my classmates put together persuasive arguments was neat because it allowed myself and the class to see pieces of the senator’s personality. I enjoyed the almost competitive nature of the process, everyone wanted to win, and I believe that made itShow MoreRelated Influences on Judicial Power Essay1472 Words   |  6 Pagestenure and contribution to checks and balances through power or judicial review. Chief Justice John Marshall, in his ruling of Marbury v. Madison, established the principle of judicial review advocated by Hamilton in the Federalist Papers. Originally designated as the weakest of the three branches in government by the framers of the Constitution, the Judiciary has accumulated an increase in political influence through judiciary review and has proven to be an essential institution in the separation of powersRead MoreEssay about The Judicial Branch1512 Words   |  7 Pagespowers over the years. However, one power, in particular, is of great magnitude, judicial review. Judicial review is the judicial branch’s power to assess the legality of the actions of the legislative and executive branches of government, as well as the states.4 Accordingly, the federal judiciary determines the validity of such actions set by the Constitution of the United States. In brief, judicial review allows the court to determine whether or not legislation that is passed within governmentRead MorePol 201 Worksheet 31051 Words   |  5 PagesLEARNING ACTIVITY WORKSHEET - Week Three Please review the full assignment prompt located within the classroom and in the POL 201 Course Guide before beginning this assignment. Utilizing the worksheet below, develop detailed paragraphs that focus on the third main point for your final paper. For each section, a minimum of one fully-developed paragraph is required. Each paragraph should include at least one in-text APA citation that provides support for the topic. At least two scholarly sourcesRead MoreThe Judicial Branch Of The United States Essay1681 Words   |  7 Pagespowers over the years. However, one power, in particular, is of great magnitude, judicial review. Judicial review is the judicial branch’s power to assess the legality of the actions of the legislative and executive branches of government, as well as the states.4 Accordingly, the federal judiciary determines the validity of such actions set by the Constitution of the United States. In brief, judicial review allows the court to determine whether or not legislation that is passed within governmentRead MoreThe Government Into A Viable Operating Legislation1345 Words   |  6 Pagesbeliefs are represented. The form of checks and balances within the legislation, along with the development of factions and what they can accomplish, discussed in Article No. 10 and 51 of The Federalist Papers mirrors the topics within in All Roads Lead to Congress. Excerpts from The Federalist Papers No. 10 and 51 show that James Madison was telling his fellow countrymen what he envisioned as a sustainable form of government; controlling factions within the majority and minority parties, the needRead MoreThe Supreme Court s Use Of Judicial Review1108 Words   |  5 PagesThe Supreme Court’s Use of Judicial Review The tool of the Supreme Court of the United States known as judicial review is a device that judges the constitutionality of laws. Judicial review is also a method by which activist judges, special interest groups, and the other branches of government further their own goals. This paper contends that judicial review should be used with great caution by Supreme Court justices as well as its influencers, and perhaps be amended so that it can fully defendRead MoreReview Of Violent Crime Control And Law Enforcement Act982 Words   |  4 PagesReview of Violent Crime Control and Law A Review of the Violent Crime Control and Law Enforcement Act Introduction The Violent Crime Control and Law Enforcement Act of 1994 is the largest most encompassing Criminal Act to have ever been passed in United States History. The act not only addressed criminal activities it also allowed for 9.7 billion dollars to be spent on prisons, 6.1 billion dollars to be spent on crime prevention programs, 2.6 billion dollars to fund DEA, INS, and other Justice DepartmentRead MoreEssay on The Case of Marbury v. Madison973 Words   |  4 Pageslegal right to the office he was appointed to. Therefore, denying delivery of the appointment to him was a violation of his rights and the law provides him remedy. The third question was to determine whether the Supreme Court had the authority to review acts of Congress for their constitutionality. The Court decided that it did have such authority to determine whether laws were unconstitutional and void. The judiciary has the duty to interpret the law and determine if a law violates any part ofRead MoreThe Debt Crisis F acing The Us And The International Community833 Words   |  4 Pagescurrent GDP. This could mean that by 2020, the congressional budget will only allow for 23 cents per dollar to actually go towards discretionary spending while the other 77 centers would have to go towards paying off interest on loans and safety nets (Fichtner, J., Rugy, V, 2014). Also, the government has promised the American people $55 trillion in future benefits which has had a hard time following through with. Every fiscal period, congressional partisanship causes or almost causes a partialRead MoreThe Impact Of Post 9 / 11 Attack On The World Trade Center ( Wtc )1655 Words   |  7 Pagesknow by attacking us. They evolved from using bombs to using airplanes to deliver as there attack weapon because it would cause lethal fatalities on U.S. soil. This was never done before and we were not prepared to handle such a massive attack. This paper will investigate what went wrong before and after 9/11, the effects o f post 9/11, surveillance surge on state and local policing, what was the problem why the C.I.A. and the F.B. I. did not communicate with each other, analyze our current and past

Correlation Paper free essay sample

Correlations measure the relationship between two variables. Establishing correlations allows researchers to make predictions that increase the knowledge base. Different methods that establish correlations are used in different situations. Each method has advantages and disadvantages that provide researchers information that is used to understand, rank, and visually illustrate how variables are related. The Pearson’s, Spearman, Kendall Rank, and positive and negative correlation are methods used to establish a correlation between variables. The Pearson method is a simple linear correlation used or illustrate how strong of a relationship two variables have. The Spearman method ranks data by order or name and is often used because the equation is simpler than Pearson’s. The Kendall Rank method measures the strength of dependence between two sets of random variables. Depending on the use of the information will determine the best method for the research project. Each method has advantages and disadvantages. The research project and individual researcher weigh out the positive and negatives in order to determine the best method. We will write a custom essay sample on Correlation Paper or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It is agreed that the Pearson’s method is easy to understand and illustrates the strength of the correlation. A prominent disadvantage is there can be confusion because it may be assumed that correlation establishes causation. The Spearman advantage is it can rank order or name data in various ways, depending on the data collected. The disadvantage discussed is there may be a focus on ranking and not on the information that creates the rank. The positive and negative correlation method has the advantage that a lot of variables and situations can be used. Variables can be studied using this method that experiments cannot be conducted on. The clear disadvantage discussed is that no cause and effect relationship can be assumed. Another discussed disadvantage of this method is that it does not account for other variables that may contribute to studied variables. Information reveals creating correlations in research using the Pearson method would be useful in domestic violence because it is a method that is easy to understand. The Spearman method that ranks data was discussed to be useful in the area of ranking of comfort qualities provided by hospice and GPA or SAT rankings. The Kendal Rank method measures strengths of dependence between two sets of variables like GPA and job performance in the degree field. Discussion about reading proficiency in children was an example that would utilize the positive and negative method the best. As determined correlation determines the relationship between two variables and is used to make predictions in research. Each method has clear advantages and disadvantages, but it is agreed that the easier the method is to understand the more useful it is. One key point that causes confusion is the relationship between correlation and causation.  It was determined that to avoid the error that a cause can be assumed based on a correlation attention must be paid to the specific method. Not every method is designed to illustrate cause and affect relationships.

The Austro-Prussian War -- Austrias War With Prussia In 1866 Essays

The Austro-Prussian War -- Austria's War with Prussia in 1866 The Austro-Prussian War -- Austria's War with Prussia in 1866 One nation. A single, unified nation powerful enough to plunge Europe and the world into two of the most devastating wars in history. That is the legacy of Germany. Two world wars are all we remember of a unified Germany. But, we never remember the struggle that took place to create such an entity. As Geoffry Wawro covers well in this book, the Austro-Prussian War was the turning point in German history that allowed Prussia to become the major figure in German affairs and start to unify the German confederation under one power, ending years of Austrian interference. Although wading through the tactical and strategic events of this war in detail, Wawro does not lose sight of the very important political aspects of this war, which began Germany's unification in earnest. This unification of Germany would prove to be one of the most influential events in Europe, with its effects being felt well into the next century. A unified Germany, and others' fear of it, would be one of the stumbling blocks that would lead to the first "Great War" and quickly after it, another one. But without Prussia's ascendance to the top of the German states, both World Wars might not have happened. So it is about time to lavish some of the attention given those two wars on one of its major causes, which Wawro does a great job of. Geoffry Wawro himself is a rather young writer. A recent graduate of Yale, Wawro's book is an expansion on his doctoral dissertation, which won him a fellowship from the Austrian Cultural Institute in 1994 for Best Dissertation on Austrian Culture. This fellowship allowed him to spend two years converting his dissertation into this book. Although young and relatively new to book writing, Wawro shows a good grasp of the tools necessary to be a successful writer. He has another book, on the Franco-Prussian of 1870, in planning. Wawro builds his book chronologically, beginning with the Congress of Vienna in 1815. He describes the problems associated with the German people's attempts to unify after the allied defeat of Napoleon. He then goes on to detail how Austria and Prussia both vied for supremacy in the confederation of German states. He focuses mainly on the direct confrontations between the two nations and the abilities of their leaders. Wawro appears almost to be a Germanophile as he fawns over the ingenious political strategies of Prussian Chancellor Bismarck, while constantly berating the sub-par performance of Austrian Emperor Franz Joseph. He also uses the beginning of the book to describe past Austrian domination in Italian affairs, and the animosity that was building between these two states. He reviews the history of Austrian interference in Italy that drove the Italians into a military alliance with Prussia, and eventually into the war. Although he is less enamored of Italy's leaders, he still holds them above the Austrian leaders whom he portrays as foreign interlopers trying to prevent Italian unity as much as German. He moves through the months and years quickly, going from one crisis to the next until the three nations were on the brink of war, with Austria facing a double-edged sword, Italy in the south and Prussia in the north. The main force of the book is Wawro's retelling of the war; planning, mobilization, and engagements. He uses a whole chapter to detail all three nation's problems in organization and preparedness. He repeatedly praises the Prussians for their efficiency in mobilization of troops and superior strategy. Wawro humbles both the Austrians and Italians as he berates both nations' military state in supplies, manpower, technology, and strategy. He takes special interest in pointing out the ineptitude of Italian and Austrian generals and the political intrigue and maneuvering that got them their commands. As the war begins he first covers the Prussian advance from the north and their quick defeat of the Austrian allies, before their new envelopment tactics on a poorly placed and poorly led Austrian army. He showers praise on this new Prussian tactic that proved unbeatable against an Austrian army that ignored its natural defenses, limited its own mobility, and whose generals ignorance and laziness allowed it to be swallowed up by a superior Prussian force. He then focuses on the belated Italian attack, which was a case study in ineptitude, as both Italian and Austrian commanders bungled from one battle to another. Eventually, he covers the main battle of Custoza which the Austrians barley winning, mostly due to their superior

World-Wide Volkswagen Corp. V. Woodson free essay sample

World-Wide Volkswagen Corp. v. Woodson Facts: In 1976, Harry and Kay Robinson purchased a new Audi automobile from Seaway Volkswagen, Inc (Seaway) in Massena, N. Y. The following year the Robinson family, who resided in New York, left that state for a new home in Arizona. As they passed through Oklahoma, another car struck their Audi in the rear, causing a fire which severely burned Kay Robinson and her two children. The Robinsons subsequently brought a products-liability action in the District Court for Creek County, Oklahoma, claiming that their injuries resulted from defective design and placement of the Audi’s gas tank and fuel system.They brought suit against the automobile’s manufacturer (Audi), its importer (Volkswagen of America), its regional distributor (World-Wide Volkswagen Corp. ), and its retailer dealer (Seaway Volkswagen). The Supreme Court of Oklahoma held that personal jurisdiction over the defendents was authorized by Oklahoma’s long-arm statute. Issue: Can the Oklahoma court exercise personal jurisdiction over nonresident defendants given that â€Å"minimum contacts† with the State may or may not exist? Decision: In favor of World-Wide. We will write a custom essay sample on World-Wide Volkswagen Corp. V. Woodson or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The judgment of the Supreme Court of Oklahoma is reversed.Reason: The concept of minimum contacts between the petitioners and the State of Oklahoma does not hold. World Wide and Seaway have no â€Å"contacts, ties, or relations† with the State of Oklahoma. They carry on no activity whatsoever in Oklahoma. They close no sales and perform no services there. They avail themselves of none of the privileges and benefits of Oklahoma law. They solicit no business there either through salespersons or through advertising reasonably calculated to reach the State. They do not sell regularly cars at wholesale or retail to Oklahoma customers or residents.In short, World Wide and Seaway have insufficient ties with the State of Oklahoma, therefore Oklahoma courts cannot practice in personam jurisdiction against them. Case Brief 3. 3 Parker v. Twentieth Century-Fox Corp. Facts: Shirley MacLaine Parker contracted with the film company, Twentieth Century-Fox, to play the female lead in a musical motion picture entitled â€Å"Bloomer Girl. † Parker was to be paid $750,000 for the role. Prior to the start of the film, Fox informed Parker that that they would not be producing â€Å"Bloomer Girl. Fox offered Parker the lead in another film, a dramatic western entitled â€Å"Big Country, Big Man. † The compensation was to be the same $750,000. Parker was given one week to accept and she refused. Parker then sought recovery of agreed upon compensation. The trial court granted summary judgment to Parker. Fox appealed. Issue: Was the job that Fox offered Parker (i. e. â€Å"Big Country†) comparable employment and was Parker obligated to accept in order to mitigate damages? Decision: In favor of Parker. The trial court’s summary judgement was affirmed. Reason: Parker’s refusal to accept Fox’s substitute employment offer could not be applied in mitigation of damages. This is because the offer of the â€Å"Big Country† lead was of employment both different and inferior. The fact that â€Å"Bloomer Girl† was to be a musical calling upon Parker’s talents as a dancer as well as an actress, and was to be produced in California, whereas â€Å"Big Country† was a straight dramatic role in a western type story taking place in Australia, demonstrates the difference in kind between the two employments.Parker was under no obligation to accept the inferior role and was not unreasonable in her refusal to mitigate the damages. Case Brief 4. 3 Granholm v. Heald Facts: Michigan and New York laws allowed in-state wineries to directly ship alcohol to consumers but restricted the ability of out-of-state wineries to do so. In several cases, some Michigan residents and some out-of-state wineries, joined by their New York customers, brought suit against the two states, arguing that the laws unfairly favor in-state business over out-of-state business.A federal district court ruled for Michigan. The Sixth Circuit Court of Appeals reversed. A separate federal district court ruled against New York. The Second Circuit Court of Appeals reversed. Issue: Does a state law that allows in-state wineries to directly ship alcohol to consumers, but restricts the ability of out-of-state wineries to do so, violates the commerce clause by discriminating against interstate commerce? Decision: In favor of the plaintiffs. Both New York and Michigan discriminate against interstate commerce through their direct-shipping laws. Therefore, the U. S. Supreme Court affirmed the judgement of the Court of Appeals for the Sixth Circuit and reversed the judgement of the Court of Appeals for the Second Circuit. Reason: Both Michigan and New York’s laws violate the commerce clause by favoring in-state wineries at the expense of out-of state wineries. Under the commerce clause in the 21st Amendment, states may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state business.Additionally, the commerce clause demands more than mere speculation to support discrimination against out-of-state goods. The States provided little concrete evidence to prove that they cannot police direct shipments by out-of-state wineries. Thompson v. Western States Medical Center Facts: Drug compounding is where a doctor or pharmacist combines ingredients to form new medicine for a specific need. FDA regulation exempts compounded drugs from regular drug approval standards if providers follow advertising and promotion restrictions regarding those drugs.A group of licensed pharmacies that specialize in drug compounding brought suit against the FDA, arguing that those provisions violate the First Amendment’s free speech guarantee. The district court and the court of appeals agreed with the defendants that the provisions regarding advertisement and promotion are unconstitutional. Issue: Do the FDA’s compounded drug regulations restrict the defendants’ freedom of speech, mainly commercial speech? Decision: In favor of the pharmacies. The U. S.Supreme court affirmed the decision of the lower courts and ruled that the FDA regulation amounts to unconstitutional restriction on commercial speech. Reason: First, the advertising and promotion restrictions involved constitute commercial speech and commercial speech is protected by the First Amendment. Second, fear that advertising compound drugs would put people who don’t need them at risk because advertisement would convince doctors to prescribe the drugs, does not justify the restriction on speech Government cannot ban the dissemination of truthful information to prevent people from making bad decisions.Additionally, forbidding the advertisement of compounded drugs would affect pharmacists other than those interested in producing drugs on a large scale. It would prevent pharmacists with no interest in mass-production medications, but who serve clienteles with special medical needs, from telling the doctors treating those clients about the alternative drugs available through compounding. Case Brief 4. 5 Brown v. Board of Education of Topeka Facts: Black children were denied admission to public schools attended by white children under laws requiring or permitting segregation according to race.A group of African Americans contend that segregated public schools are not equal and that they deprive black people of the equal protection of the law. The district courts in Kansas, South Carolina, and Virginia denied relief to the plaintiffs and upheld the â€Å"separate but equal† doctrine. In the Delaware case, the Supreme Court of Delaware adhered to that doctrine, but ordered that the plaintiffs be admitted to the white schools because of their superiority to the black schools.Issue: Does the segregation of children in public schools solely on the basis of race deprive the minority children of the equal protection of the laws guaranteed by the 14th Amendment? Decision: In favor of the plaintiffs. The U. S. Supreme Court reversed the decision of the lower courts and ruled that racial segregation in public education deprives black people of the equal protection of the laws guaranteed by the Fourteenth Amendment. Reason: Even though white schools and black schools approach equality in terms of buildings, curricula, qualifications, and teacher salary, intangible issues foster and maintain inequality.Racial segregation in public education has a detrimental effect on black children because it is interpreted as a sign of inferiority. The effects of this separation on their educational opportunities are devastating. When in comes to public education, â€Å"separate but equal† is inherently unequal. Therefore, separate educational facilities wrongly deprive black students from the equal protection of the laws guaranteed by the Fourteenth Amendment.

Field Hockey Introduction Essays

Field Hockey Introduction Essays Field Hockey Introduction Essay Field Hockey Introduction Essay Is there a difference in stress factors between college athletes and non-athletesIntroductionStatement and Purpose of the Problem The move from high school to college is one of life’s major moments, however many do not comprehend the stresses that accompany this vast transformation in education. This paper has been developed to gain greater insight into the stresses that college students face and endeavor to determine if athletes and non-athletes differ in the way that they perceive and experience stress. Significance of the ProblemStress has been a rising issue concerning both athletic and non-athletic college students, which has been brought to the public eye increasingly over recent years (Bennett, 2013). Evidence suggests that athletes may experience even greater levels of stress due to the demands of balancing both sporting and academic achievements (Wilson Pritchard, 2005). The news of an ever-increasing amount of college student suicides has bro ught rise to the issue of is college too stressful for young adults to cope with, and is there excessive pressure being applied to students for them to achieve their optimal in everything they do? Background of the ProblemCurrent research supports the reasoning that college presents students with highly stressful situations and pressures (McCleod, 2002). Lazarus and Folkman (1996) defined stress as the undesirable sentiment that occurs when an individual feels incapable of coping with the demands that are placed upon them. Although researchers acknowledge that collegiate athletics can serve as a stress reliever in some cases (Hudd et al., 2000; Kimball Freysinger, 2003; Kudlacek, 1997; Shirka, 1997), studies also suggest that athletic participation at such a competitive level can become an additional stressor that traditional college students do not experience (Kimball Freysinger, 2003; Papanikolaou, Nikolaidis, Patsiaouras, Alexopoulos, 2003).Research QuestionIn

Medication Profile Assignment Example | Topics and Well Written Essays - 750 words

Medication Profile - Assignment Example Subsequently, in interferes with the ability to clear environmental chemicals and therapeutic drugs. It is this factor besides reduced capacity for renal clearance that causes the patient develops drawn out preservation of several drugs in individuals with advanced age such as the patient in question. The profile uses the developed geriatric pharmacokinetic database to study changes in the capacity of the body to clear drugs considering the advanced age of 73 years. From the database, more than half of the drugs that hepatic cytochrome P450 enzyme processes and even through elimination in the renal averages 70 percent in the 73-year old patient. The percentage would be lower if the patient was younger preferably below 65 years. The high percentage explains why the patient is susceptible to kidney and liver diseases (Power 49). Development of these diseases complicates the clearance function of the liver and kidney further. Prescribing more drugs to the patient also referred to as polypharmacy, increases the chances of drugs interacting in the body of the patient. It comes with negative consequences. Considering the age of the patient, her nervous system has several modifications among others changed neurotransmitter, neuronal loss, altered receptor levels, and reduced capacity to change caused by xenobiotics. Changes in the central nervous of the patient increase her vulnerability to neurologic dysfunction with the threat from unitary pharmacologic agents. Other dangerous agents are environmental toxicants and polypharmacy (Priglinger 1408). The several factors affecting the patient’s ability to respond to neuroactive causal agents transforms the assessment of environmental risks in the patient a special apprehension because it presents the toughest challenge. Causal agents include pesticides, heavy metals, and general neurotoxicants. They have the potential to affect the nervous system of an individual in the end. It was the

School Uniform Essay Example | Topics and Well Written Essays - 750 words

School Uniform - Essay Example Brunsma argues that uniforms help to save money for families by ensuring that children do not pressurize their parents to buy them expensive clothes (38). However, uniforms are not cheap and must be bought year after year as the children grow bigger and older uniform no longer fits them. Moreover, children will still demand new uniform due to wear and tear. Two sets of uniforms are required thereby increasing the cost of education. Emphasis on school uniforms also leads to the emergence of cartels that control the market charging exorbitant prices to parents because most of them must buy them under the guise of â€Å"back to school offers† (Gouge, 82). During elementary level, I and my siblings exerted undue pressure on our parents to buy new uniforms as a result of the â€Å"back to school† excitement. Children and their parents flocked uniform shops creating a sharp rise in demand that caused price increases. It is also important to understand that buying uniforms doe s not mean that children will not demand regular designer clothes suitable for seasons such as summer and winter. It is therefore obvious that school uniforms do not help parents to save money.   Haydon supports the idea of school uniforms as a symbol of belonging to a certain organization. It is viewed as a symbol of pride that also creates a sense of identity for the school and the students within the community, thereby promoting learning. It is part of an organizational culture of a school and demonstrates that students appreciate being part of it (25).

Be Happier by Consuming Less Essay Example for Free

Be Happier by Consuming Less Essay Consumerist is a social and economic order that encourages the purchase of goods and services in ever greater amounts. In the American consumption, people do not know how much is enough, do we really need all we buy? Or we just buy it because everyone else has it? Does it make us any happier? In the article â€Å"The New Politics of Consumption: Why Americans Want So Much More That They Need† Juliet Schor shares with us her point of view about American Consumption. In Schor’s article says, â€Å"The average American now finds it harder to achieve a satisfying standard of living than 25 years ago† (411). Also that â€Å"The competitive consumption, the idea that spending is in large part driven by a comparative or competitive process in which individuals try to keep up with the norms of the social group with which they identify as a reference group† (412). Finally she believes that â€Å"Low income children are more likely to be exposed to commercials at school, as well as home† (413). Our personal consumer choices have ecological, social, and spiritual consequences. Much of what we purchase is not essential for our survival or even basic human comfort but is based on impulse, a momentary desire, and there is a hidden price that we, and future generations will pay for it too. The American economy’s ultimate purpose is to produce more consumer goods, not better health care, education, housing, transportation, but to provide more stuff to consumers. First, in Schor’s article she says, â€Å"The average American now finds it harder to achieve a satisfying standard of living than 25 years ago† (411). Nowadays people have to work longer hours than 25 year ago, to be able to pay all their desires. Having more and newer things each year has become not just something we want but something we need. The idea of more, ever increasing wealth has become the center of our identity, and this looks like an addiction. For example, my aunt Maria works 5 days a week to be able to pay all her bills and sometimes does overtime. She might have a lot of new and cool things, but she doesn’t even have time to enjoy all these things because she has to be working just to pay all she has. My aunt has a salary of $9. 25 per hour and getting a check of $740 biweekly which she have to use to pay her car $200, plus her phone $85, personal stuff $150, and the list keep going. I have worked 40 hours a week, going to classes full-time with little satisfaction. Without working that long, I am less stressed, and I prefer to learn how to spend less money, than spending more, and live stressed all the time. People should take more responsibility for themselves and their families and think outside of the box when it comes to life. Working less hours and buying fewer products is a good way to start. Also, Schor says, â€Å"The competitive consumption, the idea that spending is in large part driven by a comparative or competitive process in which individuals try to keep up with the norms of the social group with which they identify as a reference group† (412). People try to be in the same level that everyone else; if they see that somebody bought something, they will try to have that, just because that person has it. An example is the iPhones people are obsessed with them. The first iPhone was the 3G, then 3GS, 4, 4S, and the 5 that is the last one that just came out. All of these iPhones do almost the same functions; they just changed the size, and some other little things. People spend a lot of money buying the iPhones; the prices are between $300 and $500. The point is that people want to keep up with the newest things, just because other people will have it. For example, my cousin Heysus who is 23 years old, have been buying all the iPhones, because all his friends have them, and whenever came a new iPhone, he ordered it immediately to keep up with what his friends have. Another point is that people with less income, tend to watch more TV, in Schor’s article says, â€Å"Low income children are more likely to be exposed to commercials at school, as well as home† (413). Television and marketing are a big influence of how people spend their money. We watched an example of it in the movie of Super-Size Me, of how the companies spend a lot of their money on marketing, because they know that people is going to buy their products. We need to make people conscious about the problem that we all have as a society. Without our consumer impulse to buy the newest, coolest things on the market, there would be no market. People should think more about what they buy, and should not do unnecessary purchases I think that some people keep worrying more about what they can buy, and how they can have better and newest things instead of be worrying about how they can live happier, and less stressed. An individual does not necessarily have to live as a rich person to be happy. The thought of shorter hours working is a wealth of opportunity and adventure that no Disneyland or Las Vegas vacation can offer. It is actually stress-free and can help us to have time to more valuable parts of our life, like having more time to spend with our family and friends. Finally, as a student that works and studies at the same time, I have to be a smart consumer. I ask myself what I need and what I really don’t. Why do I need a car? Is it necessary to have a laptop when we have a library full of computers? We all need to learn that how to spend our money in a better way, and know that we do not need to have the newest and coolest things that the market offer us to be happy.

Unemployment as an Indicator of Macroeconomic Performance

Unemployment as an Indicator of Macroeconomic Performance The rate of unemployment is one of the most important indicators of macroeconomic performance. Unemployment arises due to the distortions in the supply of labor cause by the non-competitive wage differential. During the period from 1945 until at least 1968, unemployment rates in the major European economies were extremely low by todays standards. For instance in the United Kingdom, the average rate of unemployment for the entire period was about 1.8% of the labor force and in worst years it did not even exceed 2.5%. The main driving force was autonomous rather than policy related. These forces include waves of new products and processes, spread of trade and development around the world. However the cause of unemployment problem in Europe in comparison to the United States was their labor market institutions while the United States is far more superior due to the flexibility of their labor market. In this paper, determinants of unemployment in US are the concerns with economic growth as the main concern. Economic growth of a nation is the increase in a nations real output that occurs over time. In general, growth and unemployment are closely related as unemployment affects the growth rate through the scale of operation of an economy. Besides that, FDI inflow and inflation are taken into account altogether to identify the relationship towards the unemployment rate. 1.1 Background As unemployment is one of the most important economic indicators, the unemployment rate provides useful information such as how the labor market works as well as the percentage of human capital that is not used in the production process, which is especially crucial towards policy makers. Consequently, it is important to analyze the factors that impact the unemployment rate regardless short or long term perspective. The United States of America is a developed country which has one of the largest population and production in the world (Encyclopedia, 2010). As unemployment are explained by structural factors mainly by inflexible labor market. One may wonder the about the impact which economic growth, inflation and FDI have on the unemployment rate of the United States of America as the clutches of unemployment are hard to escape even for a develop country, especially for US which possesses by far the most flexible labor market. As a case study, the United States of America has been chosen as the research country. United States of America is reckoned to be particularly appropriate as United States of America labor market has proven by all accounts to be more dynamic in the sense of a higher level of job turnover, resulting in high vacancy levels at any point in time. Recently, unemployment rate in the United States of America has been found to be as high as 9.6% as of August 2010 compared to the 4. 1% ten years ago (Bureau of Labor Statistics, 2010). In the mean time the real GDP growth in 2000 was at 4.14% when the unemployment rate was 4.1% while the real GDP growth in 2003 was at 2.49% when the unemployment rate was 5.8% (Bureau of Labor Statistics, 2010). From here, it can be seen that unemployment rate moves in the opposite direction of economic growth, yet there were different versions of results concluded by different previous researchers. 1.2 Problem Statement Unemployment has been a famous macroeconomic variable that researchers tend to use to study on but even with so many researches carried out, some of the results obtained are not consistent with one and another. For instance, the debates among Monetarist and Keynesian views of unemployment as well as the new contributions of Lucass approach and new Keynesian Economics shows that there was no reason to account for growth in the unemployment model. However, a significant innovation occurred with Pissarides'(1990) formulation of an unemployment theory in equilibrium. In many previous attempts, he formalize a unique framework to study the labor market dynamic perspective, providing useful tools to analyze both long and short run unemployment. Pissarides also introduced a first link between long run unemployment and growth which matches the neoclassical framework of economic growth. ( Pissarides, 1990 Ch. II) In the case of US, its economy began its current economic recovery in December 2001. However, rather than experiencing employment growth, not only did the unemployment rate increase but the number of new jobs created in the economy actually declined significantly during the first year of the recovery (Seyfried). Thus this paper is conducted so as to affirm the relationship of economic growth has on the unemployment rate of the country. As some results obtained by past researchers showed that economic growth impacts unemployment whereas the others came to a conclusion that unemployment causes economic growth whereby the existence of Granger Causality relationship is quite possible. In this study, economic growth, inflation and FDI serves as explanatory variable to determine the relationship towards unemployment rate in the United States of America. 1.3 Objectives This study aims to investigate the determinants of unemployment rate in the United States of America with economic growth as the main concern in addition with inflation and FDI (foreign direct investment) to further assure that it is coherent with the results obtained from previous studies. 1.3.1 Specific objectives This paper aims to examine the relationship between economic growth, inflation and FDI towards the unemployment rate. On the other hand, this paper serves to probe further into the relationship between economic growth, FDI, and inflation towards unemployment to sustain the existence of granger causality relationship. 1.4 Significance of study The contribution of carrying out this study is to allow policy makers to have an insight of unemployment so as to allow them to decide on suitable policy that will help bring down the unemployment rate while sustaining appropriate inflation level and attract sufficient FDI inflow. The results generated will help provide insight to the nature of the relationship between economic growth, inflation, and FDI towards unemployment. It would be useful to policy makers to know the rate and relationship of economic growth as it is necessary to reduce the unemployment rate, or at least keeping it from rising. Moreover, in previous studies, FDI is found to have impacted the unemployment rate indirectly through spillover effects from economic growth. In this study, however, FDI is incorporated directly to affect unemployment growth; therefore the effectiveness of the implemented policy will be taken into account more effectively. CHAPTER 2: Literature Review 2.1 Conceptual Model According to Alexopolous (2003), in the case where there is technological growth in the economy, families will increase their investment in capital, which in turn increase the amount of family purchased consumption workers receive over time. As a result, firms optimally increase the wage rate proportionately in order to prevent workers from shirking on the job. Therefore, the rate of unemployment along the balanced growth path will not change over time, since the marginal product of labour and the marginal cost of labour grow at the same rate. Based on De Groot, in general, growth and unemployment are intimately related for two reasons. Unemployment affects the scale of operation of the economy and thereby the growth rate. Growth affects inter-temporal decisions of workers about where to allocate on the labor market once they are laid off, and thereby it affects equilibrium unemployment. According to Brecher (2007), rapid economic growth and FDI, accompanied by higher per capita income, usually increase output growth. Thus, domestic firms and foreign multinational corporations will demand more labour force with skills to create products. Hence, economic growth can promote future employment growth for labour force based on new Keynesian theory of the output-inflation tradeoff. Some studies found that overseas investment replaced domestic employment in developing countries; however, the same result did not happen in developed countries. Tremblay (2007) pointed out that based on classical economic theory, the Phillips Curve illustrated long-run tradeoff between unemployment and inflation. There is an inverse relationship between inflation and unemployment, that is saying inflation will rise when unemployment decrease and vice-versa. Futhermore, Luciano Fanti and Piero Manfredi (2003) mention that the neoclassical Solow model, which still provides excellent econometric fits and shows a globally stable positive growth equilibrium, but also shows two restrictive features as regards the scope of this paper: (1) it does not take into account the stylized fact of the existence of unemployment, which is generally not only positive but also strongly fluctuating; (2) in such a model fluctuations have never been endogenously determined Meanwhile, Martin Zagler (2006) noticed that the cost associated with economic growth is structural unemployment, as structural change destroys jobs in one firm and creates jobs in another. The source of unemployment is the rate of intra-sector structural change associated with faster economic growth. Besides, Bonatti (2007) says that an increase of the workers influence on the political process may raise the fraction of GDP allocated to finance the welfare state, thus leading to a higher unemployment rate and to a lower growth rate. The research work done by Chang (2007) noticed that when the degree of trade openness of Taiwan is larger, the unemployment rate of Taiwan will increase, this is because the young men and young women in Taiwan desire to extend their education in working age. According to Phillips (1998), the negative relationship between inflation and unemployment can be explained through governments expansionary policy to increase the consumption level of the citizens. As labor market tightens, unemployment rate will fall as money wages tended to rise more rapidly. Unemployment will then increase as government tries to control the inflation rate. This is because the increment in wages is closely related with the increase in price. Therefore, the trade-off between these two variables can be seen. 2.2 Methodology Effects panel regression methods were used by Zagler (2006) on the relationship between economic growth and unemployment. Moreover, Zagler (2006) checked his estimated model with the unit-root test to test the stationary of the model. In order to obtain information about the relationship between inflation and unemployment, the procedure of den Hann was employed by Bae (2006), which has the advantage as no assumptions about the order of integration in the variables of interest is required. The procedure estimates a vector regressions (VAR) model and analyzes the correlations of VAR forecast errors of inflation and unemployment at long horizons. Chang (2007) used vector autoregression method of variance decomposition and impulse response function analysis are applied to analyze various relationships among foreign direct investment (FDI), economic growth, unemployment and degree of openness in Taiwan. Besides that, he also uses the unit root test of augmented Dickey-Fuller (ADF and KPSS) test to examine the stationary properties of the economic time series. The appropriate lag-length in the ADF regression is selected by minimizing the Akaikes information criterion (AIC). He also uses co-integration test to determine whether there exists a long-run equilibrium relationship among variables and weak exogeneity, and multivariate Granger-causality test to determine their causal direction in the short-run between all variables. Besides, he also has applied the VAR technique of variance decomposition and impulse response function analysis to analyze various inter-relationships between FDI, unemployment rate and GDP variables in the case of Taiwan from the period of 1981 to 2003. Meanwhile, Eric Heyer, FrÃÆ' ©dÃÆ' ©ric ReynÃÆ' ¨s, Henri Sterdyniak (2006) present the results of the DF-GLS unit root test to test the growth rate of consumer price and also unemployment rate. 2.3 Empirical Result Zagler (2006) has carried out a research which empirically investigated the link between economic growth and unemployment, using micro econometric evidence for the United Kingdom. The results generated showed a significant and negative relationship between unemployment and economic growth. According to the result generated by Muscatelli and Tirelli (2001), it is proven that there is a negative relationship between economic growth and unemployment as Japan, Germany, Italy, France and Canada. This result is generally in favour of those theories which predict a negative linkage between unemployment on economioc growth Besides, Pehkonen (2000) stated that a fall in GDP has significant relationship with unemployment as a drop in the GDP in Finland leads to an increase in the unemployment since demand for labor have shrunk. Therefore, Pehkonen (2000) concluded that unemployment would increase as a result of a decrease in economic growth. Meanwhile, Mitra and Sato (2007) found that the major links between external scale economies and growth are perceived in terms of technical efficiency, and higher growth is taken to reduce the unemployment rate. Futhermore, Scahaik and Groot (1998) found that the unemployment and economic growth relationship in imperfect competition economy and different periods, where structural changes occur, has a negative correlation and effect of different degrees through testing the structural stability. Chang (2007) proved that economic growth as well as FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. In addition, according to Solows growth theory, employment for labour force with skill can further promote economic growth and this can be verified by Taiwans economy model. Okuns law stating that reducing unemployment for labour force can promote further economic growth is then verified. Furthermore, unemployment is very sensitive to changes in GDP and vice versa, which does lend support that rising economic growth can obviously affect unemployment for labour force. shock of unemployment rate has negative effect on economic growth . He also mentions that the shocks in economic growth and FDI inflow decrease the unemployment rate. This means that rapid economic growth and FDI inflow, accompanied by higher per capita income can promote future employment growth for labour force. In the research study of Meckl (2001), correlation between growth and unemployment is shown to be positive if the research sector is of the high-wage sector in the economy, and negative if the research sector is the low-wage sector. Arico (2003) has already observed that the rate of growth is negatively related with the rate of unemployment. If the growth rate increases, it will decrease the net rate at which the stream of profits is discounted. For each firm the entry will result less costly. More vacancies will be created, reducing the unemployment rate. (Capitalization effect).On the other hands, It will reduce the life-time of each firm, by increasing the price for human capital. Each innovation will generate fewer vacancies than before. That will be reflected in an increase of the rate of unemployment. (Indirect creative destruction effect). Besides, Fanti and Manfredi (2003) has shown a negative relation between unemployment and growth , though we should also mention the positive relation between unemployment and growth obtained in the particular creative disruption context according to Schumpeters idea. Fanti and Manfredi alsomshows a surprising relation between unemployment and growth (via effects on population which is an endogenous engine of growth): this relation can be either positive or negative depending on the relative levels of cost of childrearing of workers and unemployed persons and the level of unemployment benefits. Meanwhile, Bonatti (2007) noticed that reduction of government transfers in favor of the workers allows decreasing the ratio of total tax revenues to GDP, thus monotonically increasing the growth rate and leading to a lower unemployment rate. CHAPTER 3: RESEARCH METHOD 3.1 Data Analysis 3.1.1 Unemployment Rate In this study, unemployment rate is the main study which was examine by using some explanatory variables. According to BLS, Bureau of Labor Statistics, (2009) those people who are with jobs can be considered as employed. On the other hand, a person will be classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Dixon Shepherd (2002) stated that the unemployment rate can be considered as one of the most important indicators of macroeconomic performance in a country. The data of unemployment rate is obtained from the Bureau of Labor Statistics (BLS) which if measured in percentage from those people who are 16 years old and above from year 1970 to 2007. The method which BLS used to calculate the unemployment rate in United States is: X 100% 3.1.2 Real Gross Domestic Product Real gross domestic product (Real GDP) in a country can be measured by the total output value of goods and services which produced from the domestic labor in the country in a given year, expressed in base-year prices. In this study, it is expected that there is a negative relationship between the Real GDP and unemployment rate in United States. The source of the United States Real GDP data is from the World Bank World Development Indicators and International Financial Statistics of the IMF. On the other hand, the data obtained was converted to a 2005 base year. The formula to calculate the data of United States Real GDP is as below: 3.1.3 Foreign Direct Investment Foreign direct investment (FDI) is a kind of investment which is made to serve the business interest of the investor in a company which is in a different nation distinct from the investors country of origin. An example of FDI is a foreign company comes into a country to build or buy a factory and run a business there. Many economists believe that FDI is good for an economy, because it provides domestic job opportunities and increase domestic capital. In this study, net inflows of foreign direct investment in the measurement of current US Dollar are used. A net inflow of foreign direct investment is the total amount or value of the investment flow into United States from foreign investors to operate their business in United States and negative relationship between foreign direct investment and unemployment rate is expected in United States. 3.1.4 Consumer Price Index Consumer price index (CPI) is measured that examines the weighted average of prices of a basket of consumer goods and services in a country, such as transportation, food, rental fees and utilities fees. CPI is one of the measurements of inflation rate. According to Bureau of Labor Statistics (BLS), the prices for the goods and services used to calculate the CPI are collected in 87 urban areas in United States from about 23,000 retail and services establishments. The CPI data used in this study included all consumer items in United States from year 1970 to 2007. 3.2 Research Framework 3.2.1 Unemployment rate and Real Gross Domestic Product Based on the study, unemployment and real gross domestic product is expected to be negatively related. Edward (2007) stated there is a negative relationship between real gross domestic product and unemployment because of the theory of Okuns law. According to Okuns law, 1% increase in the unemployment rate will decrease GDP by 3%. However, Christopher (2010) said that, Okun coefficients can change over time because the relationship of unemployment to output growth depends on laws, technology, preferences, social customs, and demographics. 3.2.2 Unemployment and Consumer Price Index Consumer price index is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation. Therefore, we expect that there is an inverse relationship between the rate of unemployment and rate of inflation. According to the Phillips Curve theory, if the unemployment is high, inflation tends to be low. The diagram below shows the Phillips curve. Inflation Phillips curve Unemployment However, the result shows a positive relationship in our regression model. This problem will occur because of the multicolinearity problem in our regression model. But when one independent variable by one independent variable with the unemployment is tested, negative sign for consumer price index and unemployment are obtained. Bae (2006) stated that there is a positive long run relationship between unemployment and inflation. 3.2.3 Unemployment and Foreign Direct Investment In this study, inflow of foreign direct investment were expected to affect the unemployment rate significantly and expected that foreign direct investment has a negative long run relationship with unemployment. Foreign direct investment will increase job opportunities so, unemployment rate will decrease. Shu (2007) stated that FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. 3.3 Econometric Methodology 3.3.1 Introduction This chapter consist the used of the method to examining the relationship between the unemployment and economic condition in United State by using the time series data ranging from the year 1970 to 2007. First, the result testing will start with the test of stationary by using Augmented Dickey-Fuller unit root test and proceed with the cointegration test. Secondly, the Multiple Regression Analysis and several ways to detect the assumption of the Classical Linear Regression Model (CLRM). The multicollinearity is used to test the correlation analysis. Breusch-Godfrey Serial Correlation LM Test is used to test the existence of serial autocorrelation, Autoregression Conditional Heteroscedasticity Test is used for testing the heteroscedasticity variance of error of the model and Ramsey RESET Test is used to detect the linearity regression and misspecification error. Unemployment = f (RGDP, FDI, CPI) RGDP = Real Gross Domestic Product FDI = Foreign Direct Investment CPI = Consumer Price Index The change in unemployment is our main study that we want to examine with using a few of variables which are RGDP (Real Gross Domestic Product), FDI (Foreign Direct Investment) and CPI (Consumer Price Index). y = ÃŽÂ ²0 + ÃŽÂ ²1Ln (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3 (FDI) + Econometric Model with Expected Sign: = ÃŽÂ ²0 + ÃŽÂ ²1L (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3(FDI) (-ve) (-ve) (-ve) Where +ve indicates that there is a postive relationship between the explanatory variable and dependent variable. On the other hand, -ve indicates that there is a negative relationship between the explanatory variable and dependent variable 3.3.2 Unit root A unit root test is used to examine whether a time series variable is stationary. In the model, T-statistic, F-statistic and R-squared are used to determine to ensure the validity of the test statistics is stationary. The result will become spurious regression problem if the non-stationary series in the ordinary least square (OLS) regression is used. Spurious regression result in high significant T-statistic and highly value for the coefficient of determination R-squared, and the R-square is larger than Durbin Watson. Therefore, if the stationary does not hold, estimate is not consistent and result will be misleading. To avoid the spurious regression problem, the Augmented Dickey-Fuller test (ADF) is used to examine the stationary of the variable. An Augmented Dickey-Fuller test (ADF) is used to test for a unit root in a time series sample. The Augmented Dickey-Fuller (ADF) statistic used in the test is a negative number. Therefore, the more negative value is, more power the rejection of the hypothesis that there is a unit root at some level of confidence. The equation for Augmented Dickey-Fuller (ADF) test Where ÃŽÂ ± is a constant, ÃŽÂ ² is the coefficient on a time trend and p is the lag order of the autoregressive process. ÃŽÂ ± = 0 and ÃŽÂ ² = 0 corresponds to modeling a random walk and ÃŽÂ ² = 0 corresponds to modeling a random walk drift. By including lags of the order p, the ADF formulation allows for higher-order autoregressive processes. This means that the lag length p needs to be determined when applying in the test. One possible approach is to test from high orders and examine the t-value on coefficients. The criterion such as the Akaike information criterion (AIC), Schwarz-Bayesian information criterion (SBIC) or the Hannan-Quinn information criterion (HQIC) test is used to examine the lag length. 3.3.3 Granger Causality The Granger Causality test indicates that a time series Y is said to be Granger caused by X if X helps the prediction of Y or equivalently if the coefficients on the lagged X are statistically significant. Granger Causality shows two-way causation in the case. X Granger causes Y and Y Granger causes X. It usually through a series of t-tests and F-tests on lagged values of X and lagged values of Y. 3.3.4 Multiple Regressions The ordinary least squares (OLS) or linear least squares are a method to examine the unknown parameters in a linear regression model. It is used to assume the distribance, ui. According to Gujarati (2003), ui stands for the normal distribution representing zero mean and constant variance, à Ã†â€™2 in the multiple regression models. With the normality assumption, OLS estimators 1, and 2 are linear functions of ui. Therefore, if ui are normally distributed, so 1,and 2 will make hypothesis testing more straightforward. OLS estimators of the partial regression coefficients are identical with the maximum likelihood (ML) estimators. There are the best linear unbiased estimators (BLUE). Besides, the least-square estimators are best unbiased estimators (BUE); it means that they have minimum variance in the entire class of unbiased estimators. 3.3.5 Multicollinearity Multicollinearity shows the two or more independent variables in a multiple regression model are highly linearly related. The multicollinearity test is perfect if the correlation between two independent variables is equal to 1 or -1. Multicollinearity will occur when there is a strong linear relationship among two or more independent variables. The equation below is refer the variables is perfectly multicollinear if there exist one or more exact linear relationships among some of the variables. Estimates for the parameters of the multiple regression equation is The ordinary least squares estimates include inverting the matrix XTX where, It indicate that if the linear relationship (perfect multicollinearity) is exactly with the independent variables, the rank of X is less than k+1 and the matrix XTX will not invertible. One of the detection of multicollinearity is used detection-tolerance or the variance inflation factor (VIF) for multicollinearity where R2j is the coefficient of determination of a regression of explanatory j on all the other explanators. Tolerances of less than 0.20 or 0.10 or a VIF of 5 or 10 and above reveal a multicollinearity problem. 3.3.6 Breusch-Godfrey Serial Correlation LM Test Breusch-Godfrey Serial Correlation LM test is a test of autocorrelation that is basically allows for nonstochastic regressors such as the lagged values of the regressand; higher-order autoregressive schemes such as AR (1), AR (2), etc and higher-order moving averages of white noise error terms such as t. Two variable regression models to illustrate the test, regressors can be added to the model and also lagged values of the regressand can be added to the model. Yt =ÃŽÂ ²1 +ÃŽÂ ²2Xt +ut The error term ut assume that the pth-order autoregressive, AR (p), Ut = ptut-1 + ptut-2 + à ¢Ã¢â€š ¬Ã‚ ¦+pput-p + t. where t.is a white noise error term. The null hypothesis H0 can be show as Ho: p1 = p2 = à ¢Ã¢â€š ¬Ã‚ ¦ = pp = 0 (no autocorrelation) At 5% significant level, if the computed p value of Chi-square is less than Chi-square tests, do not reject the null hypothesis, meaning that there is no autocorrelation problem. If computed p value of Chi-square is more than Chi-square tests, reject the null hypothesis, meaning that there is autocorrelation problem. 3.3.7 Autoregressive Conditional Heteroscedasticity Test In econometrics, Autoregressive Conditional Heteroskedasticity (ARCH) model assume that the variance of the current error term is related to the previos one. Autoregressive Conditional Heteroskedasticity model is used to model the time series with time-varying volatility such as stock price. 3.3.8 Specification error Ramsey Regression Equation Specification Error Test (Ramsey RESET test) is used to examine the specification error. The specification test for the linear regression model. More specifically, it is used to test the specification error in the equation. As the result, if the non-linear combinations of the independent variables have any power in explaining the dependent variable, means that the model is mis-specified. Consider the model Ã…Â · = E {y | à Ã¢â‚¬ ¡ } = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ The Ramsey test is used to test whether the (ÃŽÂ ²1à Ã¢â‚¬ ¡)2, (ÃŽÂ ²2à Ã¢â‚¬ ¡)3à ¢Ã¢â€š ¬Ã‚ ¦,(ÃŽÂ ²k-1à Ã¢â‚¬ ¡)k has any power in explaining y. The Ramsey test is executed by calculate the following linear regression Ã…Â · = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ + ÃŽÂ ²1Ã…Â ·2 +à ¢Ã¢â€š ¬Ã‚ ¦+ ÃŽÂ ²k-1Ã…Â ·k + ÃŽÂ µ After examine the test, the means of the F-test is to determine whether ÃŽÂ ²1 through ÃŽÂ ²k-1 are zero. If the null hypothesis reveals that all regression coefficients are zero, means that the null hypothesis cannot be reject, the Ramsey test is unable to detect any misspecification. If the null hypothesis is rejected, means that the model is misspecification. 3.3.9 Jarque-Bera Test of Normality Jarque-Bera test of normality is used to test the normally distributed. It is large-sample or an asymptotic test and based on the OLS. The test first calculates the skewness and kurtosis measures of the OLS residuals. JB = n Where the n = sample size, S = skewness coefficient, and K = kurtosis coefficient. The normally distributed variable, S is zero and K is three. Hence, the Jarque-Bera test of normality is a test of the joint hypothesis that S and K are zero and three, respectively. Therefore, the value of the Jaque-Bera statistic is expected to be zero. For the null hypothesis the residual is normally distributed, asymptotically (i.e., in large samples) the Jarque-Bera statistic gives the chi-square distribution with two degree of freedom showed by Jarque and Bera (Gujarati 2003) For the alternative hypothesis the residual is not normally distributed. At 5 significant levels, computed p value is less than Jarque-Bera statistic, we can reject the null hypothesis that the residual is not normally distributed whereas computed p value is more than Jarque-Bera statistic, we do not reject the null hypothesis that the residual is normally distributed. CHAPTER 4: RESEARCH RESULTS AND INTERPRETATION 4.1 Introduction This chapter consists of the results and interpretation of the relationship between Unemployment as an Indicator of Macroeconomic Performance Unemployment as an Indicator of Macroeconomic Performance The rate of unemployment is one of the most important indicators of macroeconomic performance. Unemployment arises due to the distortions in the supply of labor cause by the non-competitive wage differential. During the period from 1945 until at least 1968, unemployment rates in the major European economies were extremely low by todays standards. For instance in the United Kingdom, the average rate of unemployment for the entire period was about 1.8% of the labor force and in worst years it did not even exceed 2.5%. The main driving force was autonomous rather than policy related. These forces include waves of new products and processes, spread of trade and development around the world. However the cause of unemployment problem in Europe in comparison to the United States was their labor market institutions while the United States is far more superior due to the flexibility of their labor market. In this paper, determinants of unemployment in US are the concerns with economic growth as the main concern. Economic growth of a nation is the increase in a nations real output that occurs over time. In general, growth and unemployment are closely related as unemployment affects the growth rate through the scale of operation of an economy. Besides that, FDI inflow and inflation are taken into account altogether to identify the relationship towards the unemployment rate. 1.1 Background As unemployment is one of the most important economic indicators, the unemployment rate provides useful information such as how the labor market works as well as the percentage of human capital that is not used in the production process, which is especially crucial towards policy makers. Consequently, it is important to analyze the factors that impact the unemployment rate regardless short or long term perspective. The United States of America is a developed country which has one of the largest population and production in the world (Encyclopedia, 2010). As unemployment are explained by structural factors mainly by inflexible labor market. One may wonder the about the impact which economic growth, inflation and FDI have on the unemployment rate of the United States of America as the clutches of unemployment are hard to escape even for a develop country, especially for US which possesses by far the most flexible labor market. As a case study, the United States of America has been chosen as the research country. United States of America is reckoned to be particularly appropriate as United States of America labor market has proven by all accounts to be more dynamic in the sense of a higher level of job turnover, resulting in high vacancy levels at any point in time. Recently, unemployment rate in the United States of America has been found to be as high as 9.6% as of August 2010 compared to the 4. 1% ten years ago (Bureau of Labor Statistics, 2010). In the mean time the real GDP growth in 2000 was at 4.14% when the unemployment rate was 4.1% while the real GDP growth in 2003 was at 2.49% when the unemployment rate was 5.8% (Bureau of Labor Statistics, 2010). From here, it can be seen that unemployment rate moves in the opposite direction of economic growth, yet there were different versions of results concluded by different previous researchers. 1.2 Problem Statement Unemployment has been a famous macroeconomic variable that researchers tend to use to study on but even with so many researches carried out, some of the results obtained are not consistent with one and another. For instance, the debates among Monetarist and Keynesian views of unemployment as well as the new contributions of Lucass approach and new Keynesian Economics shows that there was no reason to account for growth in the unemployment model. However, a significant innovation occurred with Pissarides'(1990) formulation of an unemployment theory in equilibrium. In many previous attempts, he formalize a unique framework to study the labor market dynamic perspective, providing useful tools to analyze both long and short run unemployment. Pissarides also introduced a first link between long run unemployment and growth which matches the neoclassical framework of economic growth. ( Pissarides, 1990 Ch. II) In the case of US, its economy began its current economic recovery in December 2001. However, rather than experiencing employment growth, not only did the unemployment rate increase but the number of new jobs created in the economy actually declined significantly during the first year of the recovery (Seyfried). Thus this paper is conducted so as to affirm the relationship of economic growth has on the unemployment rate of the country. As some results obtained by past researchers showed that economic growth impacts unemployment whereas the others came to a conclusion that unemployment causes economic growth whereby the existence of Granger Causality relationship is quite possible. In this study, economic growth, inflation and FDI serves as explanatory variable to determine the relationship towards unemployment rate in the United States of America. 1.3 Objectives This study aims to investigate the determinants of unemployment rate in the United States of America with economic growth as the main concern in addition with inflation and FDI (foreign direct investment) to further assure that it is coherent with the results obtained from previous studies. 1.3.1 Specific objectives This paper aims to examine the relationship between economic growth, inflation and FDI towards the unemployment rate. On the other hand, this paper serves to probe further into the relationship between economic growth, FDI, and inflation towards unemployment to sustain the existence of granger causality relationship. 1.4 Significance of study The contribution of carrying out this study is to allow policy makers to have an insight of unemployment so as to allow them to decide on suitable policy that will help bring down the unemployment rate while sustaining appropriate inflation level and attract sufficient FDI inflow. The results generated will help provide insight to the nature of the relationship between economic growth, inflation, and FDI towards unemployment. It would be useful to policy makers to know the rate and relationship of economic growth as it is necessary to reduce the unemployment rate, or at least keeping it from rising. Moreover, in previous studies, FDI is found to have impacted the unemployment rate indirectly through spillover effects from economic growth. In this study, however, FDI is incorporated directly to affect unemployment growth; therefore the effectiveness of the implemented policy will be taken into account more effectively. CHAPTER 2: Literature Review 2.1 Conceptual Model According to Alexopolous (2003), in the case where there is technological growth in the economy, families will increase their investment in capital, which in turn increase the amount of family purchased consumption workers receive over time. As a result, firms optimally increase the wage rate proportionately in order to prevent workers from shirking on the job. Therefore, the rate of unemployment along the balanced growth path will not change over time, since the marginal product of labour and the marginal cost of labour grow at the same rate. Based on De Groot, in general, growth and unemployment are intimately related for two reasons. Unemployment affects the scale of operation of the economy and thereby the growth rate. Growth affects inter-temporal decisions of workers about where to allocate on the labor market once they are laid off, and thereby it affects equilibrium unemployment. According to Brecher (2007), rapid economic growth and FDI, accompanied by higher per capita income, usually increase output growth. Thus, domestic firms and foreign multinational corporations will demand more labour force with skills to create products. Hence, economic growth can promote future employment growth for labour force based on new Keynesian theory of the output-inflation tradeoff. Some studies found that overseas investment replaced domestic employment in developing countries; however, the same result did not happen in developed countries. Tremblay (2007) pointed out that based on classical economic theory, the Phillips Curve illustrated long-run tradeoff between unemployment and inflation. There is an inverse relationship between inflation and unemployment, that is saying inflation will rise when unemployment decrease and vice-versa. Futhermore, Luciano Fanti and Piero Manfredi (2003) mention that the neoclassical Solow model, which still provides excellent econometric fits and shows a globally stable positive growth equilibrium, but also shows two restrictive features as regards the scope of this paper: (1) it does not take into account the stylized fact of the existence of unemployment, which is generally not only positive but also strongly fluctuating; (2) in such a model fluctuations have never been endogenously determined Meanwhile, Martin Zagler (2006) noticed that the cost associated with economic growth is structural unemployment, as structural change destroys jobs in one firm and creates jobs in another. The source of unemployment is the rate of intra-sector structural change associated with faster economic growth. Besides, Bonatti (2007) says that an increase of the workers influence on the political process may raise the fraction of GDP allocated to finance the welfare state, thus leading to a higher unemployment rate and to a lower growth rate. The research work done by Chang (2007) noticed that when the degree of trade openness of Taiwan is larger, the unemployment rate of Taiwan will increase, this is because the young men and young women in Taiwan desire to extend their education in working age. According to Phillips (1998), the negative relationship between inflation and unemployment can be explained through governments expansionary policy to increase the consumption level of the citizens. As labor market tightens, unemployment rate will fall as money wages tended to rise more rapidly. Unemployment will then increase as government tries to control the inflation rate. This is because the increment in wages is closely related with the increase in price. Therefore, the trade-off between these two variables can be seen. 2.2 Methodology Effects panel regression methods were used by Zagler (2006) on the relationship between economic growth and unemployment. Moreover, Zagler (2006) checked his estimated model with the unit-root test to test the stationary of the model. In order to obtain information about the relationship between inflation and unemployment, the procedure of den Hann was employed by Bae (2006), which has the advantage as no assumptions about the order of integration in the variables of interest is required. The procedure estimates a vector regressions (VAR) model and analyzes the correlations of VAR forecast errors of inflation and unemployment at long horizons. Chang (2007) used vector autoregression method of variance decomposition and impulse response function analysis are applied to analyze various relationships among foreign direct investment (FDI), economic growth, unemployment and degree of openness in Taiwan. Besides that, he also uses the unit root test of augmented Dickey-Fuller (ADF and KPSS) test to examine the stationary properties of the economic time series. The appropriate lag-length in the ADF regression is selected by minimizing the Akaikes information criterion (AIC). He also uses co-integration test to determine whether there exists a long-run equilibrium relationship among variables and weak exogeneity, and multivariate Granger-causality test to determine their causal direction in the short-run between all variables. Besides, he also has applied the VAR technique of variance decomposition and impulse response function analysis to analyze various inter-relationships between FDI, unemployment rate and GDP variables in the case of Taiwan from the period of 1981 to 2003. Meanwhile, Eric Heyer, FrÃÆ' ©dÃÆ' ©ric ReynÃÆ' ¨s, Henri Sterdyniak (2006) present the results of the DF-GLS unit root test to test the growth rate of consumer price and also unemployment rate. 2.3 Empirical Result Zagler (2006) has carried out a research which empirically investigated the link between economic growth and unemployment, using micro econometric evidence for the United Kingdom. The results generated showed a significant and negative relationship between unemployment and economic growth. According to the result generated by Muscatelli and Tirelli (2001), it is proven that there is a negative relationship between economic growth and unemployment as Japan, Germany, Italy, France and Canada. This result is generally in favour of those theories which predict a negative linkage between unemployment on economioc growth Besides, Pehkonen (2000) stated that a fall in GDP has significant relationship with unemployment as a drop in the GDP in Finland leads to an increase in the unemployment since demand for labor have shrunk. Therefore, Pehkonen (2000) concluded that unemployment would increase as a result of a decrease in economic growth. Meanwhile, Mitra and Sato (2007) found that the major links between external scale economies and growth are perceived in terms of technical efficiency, and higher growth is taken to reduce the unemployment rate. Futhermore, Scahaik and Groot (1998) found that the unemployment and economic growth relationship in imperfect competition economy and different periods, where structural changes occur, has a negative correlation and effect of different degrees through testing the structural stability. Chang (2007) proved that economic growth as well as FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. In addition, according to Solows growth theory, employment for labour force with skill can further promote economic growth and this can be verified by Taiwans economy model. Okuns law stating that reducing unemployment for labour force can promote further economic growth is then verified. Furthermore, unemployment is very sensitive to changes in GDP and vice versa, which does lend support that rising economic growth can obviously affect unemployment for labour force. shock of unemployment rate has negative effect on economic growth . He also mentions that the shocks in economic growth and FDI inflow decrease the unemployment rate. This means that rapid economic growth and FDI inflow, accompanied by higher per capita income can promote future employment growth for labour force. In the research study of Meckl (2001), correlation between growth and unemployment is shown to be positive if the research sector is of the high-wage sector in the economy, and negative if the research sector is the low-wage sector. Arico (2003) has already observed that the rate of growth is negatively related with the rate of unemployment. If the growth rate increases, it will decrease the net rate at which the stream of profits is discounted. For each firm the entry will result less costly. More vacancies will be created, reducing the unemployment rate. (Capitalization effect).On the other hands, It will reduce the life-time of each firm, by increasing the price for human capital. Each innovation will generate fewer vacancies than before. That will be reflected in an increase of the rate of unemployment. (Indirect creative destruction effect). Besides, Fanti and Manfredi (2003) has shown a negative relation between unemployment and growth , though we should also mention the positive relation between unemployment and growth obtained in the particular creative disruption context according to Schumpeters idea. Fanti and Manfredi alsomshows a surprising relation between unemployment and growth (via effects on population which is an endogenous engine of growth): this relation can be either positive or negative depending on the relative levels of cost of childrearing of workers and unemployed persons and the level of unemployment benefits. Meanwhile, Bonatti (2007) noticed that reduction of government transfers in favor of the workers allows decreasing the ratio of total tax revenues to GDP, thus monotonically increasing the growth rate and leading to a lower unemployment rate. CHAPTER 3: RESEARCH METHOD 3.1 Data Analysis 3.1.1 Unemployment Rate In this study, unemployment rate is the main study which was examine by using some explanatory variables. According to BLS, Bureau of Labor Statistics, (2009) those people who are with jobs can be considered as employed. On the other hand, a person will be classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Dixon Shepherd (2002) stated that the unemployment rate can be considered as one of the most important indicators of macroeconomic performance in a country. The data of unemployment rate is obtained from the Bureau of Labor Statistics (BLS) which if measured in percentage from those people who are 16 years old and above from year 1970 to 2007. The method which BLS used to calculate the unemployment rate in United States is: X 100% 3.1.2 Real Gross Domestic Product Real gross domestic product (Real GDP) in a country can be measured by the total output value of goods and services which produced from the domestic labor in the country in a given year, expressed in base-year prices. In this study, it is expected that there is a negative relationship between the Real GDP and unemployment rate in United States. The source of the United States Real GDP data is from the World Bank World Development Indicators and International Financial Statistics of the IMF. On the other hand, the data obtained was converted to a 2005 base year. The formula to calculate the data of United States Real GDP is as below: 3.1.3 Foreign Direct Investment Foreign direct investment (FDI) is a kind of investment which is made to serve the business interest of the investor in a company which is in a different nation distinct from the investors country of origin. An example of FDI is a foreign company comes into a country to build or buy a factory and run a business there. Many economists believe that FDI is good for an economy, because it provides domestic job opportunities and increase domestic capital. In this study, net inflows of foreign direct investment in the measurement of current US Dollar are used. A net inflow of foreign direct investment is the total amount or value of the investment flow into United States from foreign investors to operate their business in United States and negative relationship between foreign direct investment and unemployment rate is expected in United States. 3.1.4 Consumer Price Index Consumer price index (CPI) is measured that examines the weighted average of prices of a basket of consumer goods and services in a country, such as transportation, food, rental fees and utilities fees. CPI is one of the measurements of inflation rate. According to Bureau of Labor Statistics (BLS), the prices for the goods and services used to calculate the CPI are collected in 87 urban areas in United States from about 23,000 retail and services establishments. The CPI data used in this study included all consumer items in United States from year 1970 to 2007. 3.2 Research Framework 3.2.1 Unemployment rate and Real Gross Domestic Product Based on the study, unemployment and real gross domestic product is expected to be negatively related. Edward (2007) stated there is a negative relationship between real gross domestic product and unemployment because of the theory of Okuns law. According to Okuns law, 1% increase in the unemployment rate will decrease GDP by 3%. However, Christopher (2010) said that, Okun coefficients can change over time because the relationship of unemployment to output growth depends on laws, technology, preferences, social customs, and demographics. 3.2.2 Unemployment and Consumer Price Index Consumer price index is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation. Therefore, we expect that there is an inverse relationship between the rate of unemployment and rate of inflation. According to the Phillips Curve theory, if the unemployment is high, inflation tends to be low. The diagram below shows the Phillips curve. Inflation Phillips curve Unemployment However, the result shows a positive relationship in our regression model. This problem will occur because of the multicolinearity problem in our regression model. But when one independent variable by one independent variable with the unemployment is tested, negative sign for consumer price index and unemployment are obtained. Bae (2006) stated that there is a positive long run relationship between unemployment and inflation. 3.2.3 Unemployment and Foreign Direct Investment In this study, inflow of foreign direct investment were expected to affect the unemployment rate significantly and expected that foreign direct investment has a negative long run relationship with unemployment. Foreign direct investment will increase job opportunities so, unemployment rate will decrease. Shu (2007) stated that FDI have negative effects on unemployment as FDI are expected to generate economic growth by encouraging the expansion of trade and foreign investment. 3.3 Econometric Methodology 3.3.1 Introduction This chapter consist the used of the method to examining the relationship between the unemployment and economic condition in United State by using the time series data ranging from the year 1970 to 2007. First, the result testing will start with the test of stationary by using Augmented Dickey-Fuller unit root test and proceed with the cointegration test. Secondly, the Multiple Regression Analysis and several ways to detect the assumption of the Classical Linear Regression Model (CLRM). The multicollinearity is used to test the correlation analysis. Breusch-Godfrey Serial Correlation LM Test is used to test the existence of serial autocorrelation, Autoregression Conditional Heteroscedasticity Test is used for testing the heteroscedasticity variance of error of the model and Ramsey RESET Test is used to detect the linearity regression and misspecification error. Unemployment = f (RGDP, FDI, CPI) RGDP = Real Gross Domestic Product FDI = Foreign Direct Investment CPI = Consumer Price Index The change in unemployment is our main study that we want to examine with using a few of variables which are RGDP (Real Gross Domestic Product), FDI (Foreign Direct Investment) and CPI (Consumer Price Index). y = ÃŽÂ ²0 + ÃŽÂ ²1Ln (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3 (FDI) + Econometric Model with Expected Sign: = ÃŽÂ ²0 + ÃŽÂ ²1L (RGDP) + ÃŽÂ ²2 (CPI) + ÃŽÂ ²3(FDI) (-ve) (-ve) (-ve) Where +ve indicates that there is a postive relationship between the explanatory variable and dependent variable. On the other hand, -ve indicates that there is a negative relationship between the explanatory variable and dependent variable 3.3.2 Unit root A unit root test is used to examine whether a time series variable is stationary. In the model, T-statistic, F-statistic and R-squared are used to determine to ensure the validity of the test statistics is stationary. The result will become spurious regression problem if the non-stationary series in the ordinary least square (OLS) regression is used. Spurious regression result in high significant T-statistic and highly value for the coefficient of determination R-squared, and the R-square is larger than Durbin Watson. Therefore, if the stationary does not hold, estimate is not consistent and result will be misleading. To avoid the spurious regression problem, the Augmented Dickey-Fuller test (ADF) is used to examine the stationary of the variable. An Augmented Dickey-Fuller test (ADF) is used to test for a unit root in a time series sample. The Augmented Dickey-Fuller (ADF) statistic used in the test is a negative number. Therefore, the more negative value is, more power the rejection of the hypothesis that there is a unit root at some level of confidence. The equation for Augmented Dickey-Fuller (ADF) test Where ÃŽÂ ± is a constant, ÃŽÂ ² is the coefficient on a time trend and p is the lag order of the autoregressive process. ÃŽÂ ± = 0 and ÃŽÂ ² = 0 corresponds to modeling a random walk and ÃŽÂ ² = 0 corresponds to modeling a random walk drift. By including lags of the order p, the ADF formulation allows for higher-order autoregressive processes. This means that the lag length p needs to be determined when applying in the test. One possible approach is to test from high orders and examine the t-value on coefficients. The criterion such as the Akaike information criterion (AIC), Schwarz-Bayesian information criterion (SBIC) or the Hannan-Quinn information criterion (HQIC) test is used to examine the lag length. 3.3.3 Granger Causality The Granger Causality test indicates that a time series Y is said to be Granger caused by X if X helps the prediction of Y or equivalently if the coefficients on the lagged X are statistically significant. Granger Causality shows two-way causation in the case. X Granger causes Y and Y Granger causes X. It usually through a series of t-tests and F-tests on lagged values of X and lagged values of Y. 3.3.4 Multiple Regressions The ordinary least squares (OLS) or linear least squares are a method to examine the unknown parameters in a linear regression model. It is used to assume the distribance, ui. According to Gujarati (2003), ui stands for the normal distribution representing zero mean and constant variance, à Ã†â€™2 in the multiple regression models. With the normality assumption, OLS estimators 1, and 2 are linear functions of ui. Therefore, if ui are normally distributed, so 1,and 2 will make hypothesis testing more straightforward. OLS estimators of the partial regression coefficients are identical with the maximum likelihood (ML) estimators. There are the best linear unbiased estimators (BLUE). Besides, the least-square estimators are best unbiased estimators (BUE); it means that they have minimum variance in the entire class of unbiased estimators. 3.3.5 Multicollinearity Multicollinearity shows the two or more independent variables in a multiple regression model are highly linearly related. The multicollinearity test is perfect if the correlation between two independent variables is equal to 1 or -1. Multicollinearity will occur when there is a strong linear relationship among two or more independent variables. The equation below is refer the variables is perfectly multicollinear if there exist one or more exact linear relationships among some of the variables. Estimates for the parameters of the multiple regression equation is The ordinary least squares estimates include inverting the matrix XTX where, It indicate that if the linear relationship (perfect multicollinearity) is exactly with the independent variables, the rank of X is less than k+1 and the matrix XTX will not invertible. One of the detection of multicollinearity is used detection-tolerance or the variance inflation factor (VIF) for multicollinearity where R2j is the coefficient of determination of a regression of explanatory j on all the other explanators. Tolerances of less than 0.20 or 0.10 or a VIF of 5 or 10 and above reveal a multicollinearity problem. 3.3.6 Breusch-Godfrey Serial Correlation LM Test Breusch-Godfrey Serial Correlation LM test is a test of autocorrelation that is basically allows for nonstochastic regressors such as the lagged values of the regressand; higher-order autoregressive schemes such as AR (1), AR (2), etc and higher-order moving averages of white noise error terms such as t. Two variable regression models to illustrate the test, regressors can be added to the model and also lagged values of the regressand can be added to the model. Yt =ÃŽÂ ²1 +ÃŽÂ ²2Xt +ut The error term ut assume that the pth-order autoregressive, AR (p), Ut = ptut-1 + ptut-2 + à ¢Ã¢â€š ¬Ã‚ ¦+pput-p + t. where t.is a white noise error term. The null hypothesis H0 can be show as Ho: p1 = p2 = à ¢Ã¢â€š ¬Ã‚ ¦ = pp = 0 (no autocorrelation) At 5% significant level, if the computed p value of Chi-square is less than Chi-square tests, do not reject the null hypothesis, meaning that there is no autocorrelation problem. If computed p value of Chi-square is more than Chi-square tests, reject the null hypothesis, meaning that there is autocorrelation problem. 3.3.7 Autoregressive Conditional Heteroscedasticity Test In econometrics, Autoregressive Conditional Heteroskedasticity (ARCH) model assume that the variance of the current error term is related to the previos one. Autoregressive Conditional Heteroskedasticity model is used to model the time series with time-varying volatility such as stock price. 3.3.8 Specification error Ramsey Regression Equation Specification Error Test (Ramsey RESET test) is used to examine the specification error. The specification test for the linear regression model. More specifically, it is used to test the specification error in the equation. As the result, if the non-linear combinations of the independent variables have any power in explaining the dependent variable, means that the model is mis-specified. Consider the model Ã…Â · = E {y | à Ã¢â‚¬ ¡ } = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ The Ramsey test is used to test whether the (ÃŽÂ ²1à Ã¢â‚¬ ¡)2, (ÃŽÂ ²2à Ã¢â‚¬ ¡)3à ¢Ã¢â€š ¬Ã‚ ¦,(ÃŽÂ ²k-1à Ã¢â‚¬ ¡)k has any power in explaining y. The Ramsey test is executed by calculate the following linear regression Ã…Â · = ÃŽÂ ²Ãƒ Ã¢â‚¬ ¡ + ÃŽÂ ²1Ã…Â ·2 +à ¢Ã¢â€š ¬Ã‚ ¦+ ÃŽÂ ²k-1Ã…Â ·k + ÃŽÂ µ After examine the test, the means of the F-test is to determine whether ÃŽÂ ²1 through ÃŽÂ ²k-1 are zero. If the null hypothesis reveals that all regression coefficients are zero, means that the null hypothesis cannot be reject, the Ramsey test is unable to detect any misspecification. If the null hypothesis is rejected, means that the model is misspecification. 3.3.9 Jarque-Bera Test of Normality Jarque-Bera test of normality is used to test the normally distributed. It is large-sample or an asymptotic test and based on the OLS. The test first calculates the skewness and kurtosis measures of the OLS residuals. JB = n Where the n = sample size, S = skewness coefficient, and K = kurtosis coefficient. The normally distributed variable, S is zero and K is three. Hence, the Jarque-Bera test of normality is a test of the joint hypothesis that S and K are zero and three, respectively. Therefore, the value of the Jaque-Bera statistic is expected to be zero. For the null hypothesis the residual is normally distributed, asymptotically (i.e., in large samples) the Jarque-Bera statistic gives the chi-square distribution with two degree of freedom showed by Jarque and Bera (Gujarati 2003) For the alternative hypothesis the residual is not normally distributed. At 5 significant levels, computed p value is less than Jarque-Bera statistic, we can reject the null hypothesis that the residual is not normally distributed whereas computed p value is more than Jarque-Bera statistic, we do not reject the null hypothesis that the residual is normally distributed. CHAPTER 4: RESEARCH RESULTS AND INTERPRETATION 4.1 Introduction This chapter consists of the results and interpretation of the relationship between