The impact of issuing Euro on Germany's Economic Growth in 2002

Table of Contents

Introduction3

Significance of the Study3

Background of the Study3

Research Question4

Hypothesis4

Variables4

Literature Review5

Expenses of the Government5

Exports of goods and services6

Final consumption expenditure7

Gross capital formation and domestic savings8

Methodology8

Data Collection8

Method8

Econometric Model9

Data Analysis10

Conclusion13

Introduction

Significance of the Study

The study is related to “the impact of issuing Euro on the economic growth of Germany in 2002.” In relation to this, it is important and imperative to note that economic growth is a means to reach the goals which are set by the country in its monetary and fiscal policies. Furthermore, economic growth is not a goal. Unfortunately, it sounds as if often economic growth is a goal in itself. The consequences of allowing economic growth as a goal and to measure it by GDP growth is that countries like Germany do not know for sure if the economic activities in the country aimed at the goals that the country really have. It may be that they directly counteract the goals as welfare and for the sustainable development etc.

Background of the Study

The study which relates to issuing Euro on the economic growth of Germany in 2002, it can be said that the growth in an economy is a factor that makes the country above in comparison with the other countries. There are various factors of increasing growth of an economy and the less issuing of currency is one of them. In addition to this, the country who issues currency in larger amounts faces devaluation in its currency and therefore impact the growth in a downward direction. Moreover, this is something which happened with Germany in 2002 which poses certain exhausting pressures in the economy of Germany. Furthermore, the currency notes started to issue in such a large amount in order to complete the government expenditures which results in the decreases of Germany growth rates.

Research Question

Is there an impact of issuing Euro on the economic growth of Germany in 2002?

Hypothesis

HO: There is a significant positive impact of issuing Euro on the economic growth of Germany in 2002.

HA: There is no significant positive impact of issuing Euro on the economic growth of Germany in 2002.

Variables

Dependent Variable

The dependent variable that is included in the study is growth rates of GDP.

Independent Variables

The independent variables that are included in the study include the following:

Gross domestic savings;

Gross capital formation;

Final consumption expenditure;

Exports of goods and services;

Expenses of the German Government.

Literature Review

The macroeconomic factors like trade and gross domestic savings is no doubt the key determinants of a country's economic growth but aside with them, one other factor which has a major share in the economic growth is the rate of exchange of the particular country. It certainly plays a significant role in the trading factor i.e. imports and exports that can gather intensive revenues for an economy. The trade being an important share shows the importance of this variable not only from the government point but also from the producer's point of view as well. It has also a significant impact on the internal ...