An empirical evaluation of the Purchasing Power Parity - Dissertation Example In pursuit of investigating the empirical validity of the PPP theory, this study uses the monthly Japanese Yen to US Dollar exchange rate and the seasonally adjusted Japanese and US monthly Consumer Price Index series as the representative of the price levels as available from OECD main economic indicators 2010. Our data set covers a sample period ranging from 1st January1960 to 1st June 2010. The indexing of CPI for both the Japanese and US series is in accordance with assuming the price level of 2005=100.5. EstimationThis section presents the results of the estimations specified in section 2. We start of by presenting the statistical preliminaries and time series plots of the variables to engender a preconception of what can be expected from the estimated equations. a. Statistical preliminariesTable 1 presents the summary statistics for the variables of interest. Note that these are expressed in terms of natural logarithms of the levels.Figure 1 below depicts the inter-temporal dynamics of the natural logarithm of the series of Japanese Yen to US Dollar Exchange rates. Observe that the series provides a clear visual evidence of a downward trend implying that over the period of 1970 to 2011, there has been a gradual decline in the exchange rate. Additionally, the series also appears to be non-stationary. Of course stationarity properties can only be conclusively verified after formal conduction of unit root tests. Figure 3 presents the time plots of Japanese and US consumer price indices in logs.... tion: where is the natural log of the Japanese Yen to US Dollar exchange rate at time t, is the natural log of the price level index of Japan and is the natural log of the price level index of USA and is an additive iid noise term. 3. Testable Hypothesis The hypotheses that we can test using this specification are as follows: i) Strong or absolute PPP: ii) Relatively weaker form of PPP: ? iii) Weakest form of PPP: ? Note that for ii) and iii) to be valid specifications, the additive error term will have to be stationary. Otherwise estimates will be spurious. 4. Data In pursuit of investigating the empirical validity of the PPP theory, this study uses the monthly Japanese Yen to US Dollar exchange rate and the seasonally adjusted Japanese and US monthly Consumer Price Index series as the representative of the price levels as available from OECD main economic indicators 2010. Our data set covers a sample period ranging from 1st January1960 to 1st June 2010. The indexing of CPI for both the Japanese and US series is in accordance with assuming the price level of 2005=100. 5. Estimation This section presents the results of the estimations specified in section 2. We start of by presenting the statistical preliminaries and time series plots of the variables to engender a preconception of what can be expected from the estimated equations. a. Statistical preliminaries Table 1 presents the summary statistics for the variables of interest. Note that these are expressed in terms of natural logarithms of the levels. Table 1: Summary Statistics of the variables of interest Figure 1 below depicts the inter-temporal dynamics of the natural logarithm of the series of Japanese Yen to US Dollar Exchange rates. Observe that the series provides a clear visual evidence of a downward trend
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Arts Marketing (Communications for the Arts) - Essay Example
creation being a key aspect of the organization, it seeks to bridge the gap created between education and industry by capturing those left on the wayside. This allows people to cultivate their skills and create products that are marketable and at the same time creates employment and promotes trade. A business model may be defined as the way in which an organization creates, delivers and captures value, (Ostewalder and Pigneur, 2010). It should reflect how the organization works and how they seek to deliver their mission, while incorporating the needs of their members and clients. Art is created by individuals and hence when organizations managing artists have weak business models, then they cannot achieve market stability. The use of proper business models, promotes longevity of the business, encouraging consumer confidence and creating markets based on needs. The most important factor for any business and marketing strategy is promoting sustainability of the artists business. Sustainable businesses are successful and able to maintain their businesses beyond a short term period to enjoy longevity and success. Art has a big influence on society and it also changes the way people relate and view things. The business models adopted by organizations must in addition to being able to market the artist’s products; it must also be able to deal with the artist’s creativity. This has been widely ignored based on the fact that consumers have now become number one and hence artists have to ensure that they meet their demands. This is not viable as most artists create based on feelings, inspiration and ideas and hence not having the freedom to create will make artists feel curtailed. The most appropriate business models must therefore cater to the needs of both the consumer and most of all the artists’ creativity to create better and more inspired creations. Artists around the world exist based on their creative elements and their ability to create things which are |