TABLE OF CONTENTS
Title Page - - - - - - - - - - -i
Approval page - - - - - - - - - -ii
Dedication - - - -- - - - - - -iii
Acknowledgement - - - - - - - - -iv
Abstract - - - - - - - - - - -vi
Table of content - - - - - - - - -vii
1.0 Chapter one: Introduction
1.1 Background of the study - - - - - - -1
1.2 Statement of the problem - - - - - - -5
1.3 Objective of the study - - - - - - -6
1.4 Formulation of the research hypothesis - - - - -8
1.5 Significance of the study - - - - - - -8
1.6 Limitations of the study - - - - - -9
1.7 Scope of the study - - - -- - - - -10
CHAPTER TWO: LITERATURE REVIEW
2.1 The Purchasing Power Parity theory - - - - -11
2.2 Theoretical issues - - - - - - - -14
2.3 The traditional flow model - - - - - - -17
2.4 The elasticity approach - - - - - - -18
2.5 The monetary approach - - - - - - -21
2.6 The portfolio balance model - - - - - -24
2.7 Empirical literature - - - - - - - -30
2.8 Limitations of the previous studies - - - - - -43
2.9 Definition of the terms - - - - - - -46
CHAPTER THREE: Research Methodology
3.1 Theoretical framework -- - - - - - - -50
3.2 Model specification - - - - - - - -51
3.3 Method of evaluation - - - - - - -54
3.4 Estimation procedure - - - - - - - -56
3.4.1 Economic A Priori test- - - - - - - -57
3.4.2 Statistical test (first-order) - - - - - -58
3.4.3 Econometric (second order) test - - - - -60
3.5 Nature and sources of data - - - - - - -62
CHAPTER FOUR: Presentation And Analysis Of Result
4.1 Presentation and interpretation of result - - - -63
4.2 Economic a priori criteria - - - - - - - -64
4.3 Statistical criteria (first-order test) - - - - - -66
4.3.1 Coefficient of multiple determination (R2) - - - -66
4.3.2 The student’s T-test - - - - - - - -67
4.3.3 F-statistics - - - - - - - - - -69
4.4 Econometrics criteria - - - - - - - -71
4.4.1 Test for Auto-correlation - - - - - - -71
4.4.2 Normality test for Residual - - - - - -73
4.4.3 Test for heteroscedasticity - - - - - -74
4.4.4 Test for multicollinearity - - - - - - -77
5.0 CHAPTER FIVE: SUMMARY OF FINDINGS,
CONCLUSIONS AND POLICY RECOMMENDATIONS
5.1 Summary of Findings -- - - - - - - 79
5.2 Conclusions - - - - - - - - -80
5.3 Policy Recommendation - - - - - - -81
5.4 Bibliography - - - - - - - - -84