Doing Research in Economics I

8/13/2019 Doing Research in Economics I

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Doing Research in Economics

Part IMoch.Muslich Mustadjab

University of Brawijaya Malang


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POINTERS

What is research?

The research process in economics

Surveying the literature

Writing as a tool for economic research

Writing as a product of economic research

Critical reading

Theorising

Locating data

Manipulating data

Empirical testing

Communication of results


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1. What is research?

Research is the creation of new valid knowledge, i.e.an extension of the research frontier

Research is based upon the existing up-to-dateknowledge in the field

Knowledge is more than data or information it isstructured information

Knowledge is created by constructing a line ofarguments

An argument is an assertion or a claim supported byreasons or evidence


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The construction of knowledge

Scholars create knowledge by constructing

competing arguments using the following tools:

Mental Processes thinking about an argument

Oral Discourse verbalising the argument Diagram Techniques illustrating the argument

Mathematic Techniques manipulating equations to test

the logic of the argument

Writing to present and spread the argument


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How are arguments evaluated?

What are the reasons behind the argument?

Does the argument make sense? Why or why not?

Is the logic flawed?

What are the underlying explicit and implicit assumptions?

Are they flawed?

How critical are the assumptions, i.e. would differentassumptions lead to different conclusions?

What is the empirical evidence? Does it support the

conclusion? In light of the reasons and evidence provided, is the argument

persuasive? If so, the argument is valid until it is invalidated by

new arguments.


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The scientific method

Select a scientific problem or question

Apply a theory to derive hypotheses about theproblem or question

Test the hypotheses by comparing itspredictions to evidence from the real world

If a hypothesis fails the test check the line of

arguments and if it is OK reject it If you cant reject a hypothesis you complete

your line of arguments


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2. The research process in economics

Develop a well defined research question

Survey the literature in the field

Define a clear purpose

Select a theory proper for the research question

Develop hypotheses

Test your hypotheses

Interpret your results and draw conclusions

Communicate your research


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The objective of a research project

is to analyse some aspect of a significant issue

or problem


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Step 1: Defining the scope of the research

What is the research topic?

What is the research question?

What is the tentative research hypotheses? What is the current knowledge, i.e. where

goes the research frontier?

What is the purpose?


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What characterises a good research

question?

Problem-oriented

Analytical

Interesting and significant Amendable to economic analysis

Feasible, given the time and resources

available


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Strategies for selecting research questions

(1)

Pick a general topic area that interests you,

ideally one in which you have some

background

Start reading the literature, not merely to

see what has been done, but also to identify

what research questions remain to be

answered or what problems remain to besolved.


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Strategies for selecting research questions

(2)

Select a promising from what you have foundin the literature:

Could an interesting previous study be applied to

a new place or time? Are there conflicting findings on some question,

which you might try to reconcile?

Studies often conclude suggesting questions for

future research. The literature survey may reveal gaps in the

current knowledge that you can explore.


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Step 2: Surveying the literature

What is currently known?

What has been discovered to date on a given

topic?

Objective: to identify and become familiar

with the major studies that have been

published on a topic

Start with the most recent publications and

work backwards to the roots


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Step 3. Selecting one theory

Based upon your literature survey you must

choose one theory, which is relevant for

explaining your research problem

Motivate your choice

Never spend time on long presentations of

alternative theories instead give references

to literature, where competing theories are

presented


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Step 4: Analysing the problem

The theoretical analysis of the research problem, is theprocess, where theory is applied to shed light on the problem: What are the essential concepts comprising the problem being

analysed?

How are these essential concepts related?

What do these relationships imply? The result of this analytical process is the research hypothesis

(hypotheses).

A research hypothesis is the proposed answer to yourresearch question.

Hypotheses are derived from economic theory (and earlierempirical research)


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Step 5: Testing your analysis (1)

The scientific method in economics is stronglydependent upon empirical testing

Empirical testing implies comparing the predictionsof theory, i.e. the hypotheses, with appropriatereal-world evidence

You must decide how you will go about to test yourhypotheses, i.e. decide your research design, which

involves1. Finding a good, large and relevant data set, and

2. Selecting an econometric method


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Key questions:

How to choose an econometric method, which produce

the best possible and most reliable results?

How to adequately test the hypotheses? Remember that a hypothesis is either rejected or not

rejected. It is never accepted!

If you can not reject a hypothesis, then the

theoretical proposition is provisionally accepted until

it eventually is rejected


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If a hypothesis is rejected then one must ask the

following questions:

Is there something wrong with the theory?

Is there something wrong with the data?

Is there something wrong with the econometric method?

If you find that something is wrong you have to

retake the process, otherwise you continue to

present your results in the thesis


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Step 6: Interpreting the results and

drawing conclusions (1)

What are the results of the empirical testing of the

research hypothesis?

Are they consistent with the predictions of theory?

Are they consistent with the results form earlierempirical research?

Are there any problems (multicollinearity,

heteroskedasticity, etc.) with the econometric testingthat need to be corrected?


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Step 6: Interpreting the results and

drawing conclusions (2)

Are there shortcomings with the econometric

method that limit or weaken the results?

Given the answers to the above questions: what can

be concluded about the results? To what extent are they in line with the hypotheses?

What can be concluded about your analysis and

about your research question more broadly?


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What is good research?

Good research, is research that follows thescientific method, wherever the results lead,even if they reject one or several hypotheses

A research projects that rejects a hypothesesis not failed because it still advances ourknowledge in this case by eliminating onehypothesis as an explanation to the researchproblem

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Doing Research in Economics I