1. Introduction: 2-3 parags that introduce the topic, state the hypothesis, and provide some theoretical support. "This paper examines the negative relationship between the dollar exchange rate and the sale of exports overseas. The relationship is assumed to be negative since an increasing dollar makes US exports more expensive (in francs, pounds etc.) and reduces the quantity purchased."

2. Methodology: 1-2 parags that identify variables used to do the test, specify which is dependent (effect) and independent (cause), the years examined, and the statistical analysis used. "The dependent variable used will be total merchandise exports, and the independent variable will be the dollar-pound rate. Years chosen are quarterly data for 1941 through 1996. Both are taken from Macroeconomics (1998) by Robert Gordon. The relationship will be tested using scatterplots and bivariate regression.

3. Findings: May take several paragraphs as you lay out trends in data, interpret results in light of your hypothesis, and suggest ‘other factors’ that may also affect your dependent variable that were not included in your model (that focused exclusively on the exchange rate).

"As the data in table 1 indicate, the two variables seem to move roughly in opposite directions over the period suggesting a negative relationship. However, it is clear that

it is not a close fit suggesting other factors are also responsible for affecting

the level of exports over this period. Some of these include the level of in-

come abroad and foreign preferences, the level of protectionism, as well as

the US level of inflation and international competitiveness, to name a few."

"In order to determine more precisely, the affect of the exchange rate on the level of exports, a bivariate regression was run resulting in the following estimated relationship:

X = 898.4 - 5.45 ER t = -1.84 R2 = .3554

These results indicate the hypothesized negative relationship, and more importantly a statistically significant t-value. The Test-t is 1.84 which exceeds the critical t-value of 1.658 at the .05 level of significance. This confirms the hypothesis, but the R2 suggests that just above a third of the variation in exports is associated ("is caused by") with variations in the exchange rate. Although this is a relatively strong level of explanation, it points to other factors as determinants of the other two-thirds variation in exports. These include....as above."

4. Conclusion: should summarize your findings, suggest one policy implication, and provide at least one or two suggestions for further follow-up research. "This study confirms the negative relationship between the exchange rate and exports for the US and suggests any policies that favoring a stronger dollar will in fact weaken our export sectors. Further research might examine the impact of US inflation levels on export performance."

5. References, Data Appendix. (For discussion of Durbin-Watson, see GUIDELINES handout.