The Research Question!

When embarking on the roller-coaster ride of emotions that is your thesis, it is of fundamental importance to have a clear idea of what you are attempting to accomplish. "But that's blindingly obvious!", I hear you cry. Yes it is my friends, yet the number of tears that have be shed by students who have lost their way because of this lack of focus is innumerable.

A suitable research question normally requires hours or perhaps weeks of careful consideration to craft. Many of us start off with a research idea that is far too grand. Grand is good, but few of us have the time or finances to stay at university until our magnum opus is complete. Rather, think of your initial research idea as a chunk of wood, which then then needs to be carved  and sanded down such that only the most essential and beautiful characteristics remain.

So how do you craft a finely honed research question? Well the steps are pretty generic:

Choose a topic that you are interested in

This is very important. Choosing your research focus is like choosing a roommate or girlfriend. Choose correctly and working on your thesis won't always feel like work. Choose incorrectly however and your relationship with your thesis will be unpleasant.

I have always enjoyed macroeconomic theory, so naturally this is where I sought my thesis topic. Unfortunately I struggled to find a topic that had not already be done to death.

Do your background research

Naturally if you have an interest in a general area I suspect that you'll already be casually reading the work coming out from it. If you are not however,  you really must start, else you'll have no idea of the wealth of research opportunities that are waiting for you. Great sources here include journal articles, working papers from major universities as well as the research published by national and international organizations, such as the World Bank and International Monetary Fund (IMF).

Eventually I read a policy document that outlined the New Growth Path (NGP) for South Africa. This document identified various strategies intended to stimulate the South African economy. I latched onto an assertion mentioned in that document that the South African Reserve Bank (SARB) should seek to depreciate the South African Rand to stimulate economic growth and create more jobs. The NGP however went on to add that the SARB be should proceed to depreciate the Rand whilst maintaining low inflation and low interest rates. More on that just a little later.

Start asking questions

Well, I don't like that. Rather, always question, accept nothing that is said as truth. Only once it has passed all your logical tests, allow it to sit as only a working theory, and then when new evidence is available, re-evaluate.

Whilst reading the NGP policy document I found the assertion that the SARB should depreciate the Rand to stimulate growth whilst simultaneously maintaining the interest and inflation rates low at odds with the behavior of the SARB.  I believed this, as to the best of my knowledge the SARB has behaved as an inflation targeting central bank since 2000. Addtionally, whilst a depreciation of the exchange rate may stimulate growth via a positive effect on exports it would also impose inflationary pressures through something known as the exchange rate pass through (ERPT) effect. Finally, the SARB, practicing inflation targeting would then need to increase interest rates in response to the ERPT effect.

To focus you research right down into a neat concise package, to which you can refer back to for guidance, I would suggest distilling your idea down to a single aim and perhaps 3 to 5 specific objectives.  My thesis research question was thus something like.

Aim: 

To assess the impact of an exchange rate movement on a set of South African macroeconomic variables.

Specific objectives:

• To determine the effect of an exchange rate movement on the development of the South African Gross Domestic Product.
•  To determine the effect of an exchange rate movement on South African consumer prices.
• To determine the effect of an exchange rate movement on the interest rate setting behavior of the SARB.

See, nice and neat. Almost sounds easy. In theory it is and this blog is dedicated to taking you through all the steps required to complete a piece of empirical research using Stata.

I hope that you will join me next time as I discuss gathering data, inputing that data into Stata and how the research question focuses you into what data you are gathering.