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. W. Elmendorf (1996) uses a survey
with an indirect approach which combines behavioural intentions and estimates
of certain features of consumers’ preferences. This paper examines the
consumption and saving of consumers who follow different lifestyle patterns.
The consumers chosen for this are consumers who plan to leave bequests,
consumers who have a short time horizon, consumers who save for fixed goals and
consumers who follow the lifecycle model.

Kapoor and Ravi (2009) set up a study to find “The Effect of Interest Rate on Household
Consumption: Evidence from a Natural Experiment in India”.
This paper also tries to estimate the changes in household consumption with
regards to interest rate changes. A change in Indian banking legislation
allowing banks to offer higher interest rates to people over the age of 60
years old. This has been the basis for conducting this study. Data from the
National Sample Survey was used in order to calculate the regression estimates,
based on age. It was found that a 50 basis point increase in interest rates on
deposits directly led to a decline of 12% in consumption expenditure. The
decline was primarily due to the decline in non-food and non-essential items.
Prior to the legislation there was no difference in the consumption

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This work will
contribute to banks and also consumers especially in the world we are living in
now with negative interest rates. Cash could be kept and monetary policy could
be insignificant so studies involving low and negative interest rates will be
extremely beneficial in the coming years, especially if they are the cause of
the downfall of the economy again. This information will also be beneficial to
central banks as finding the optimal interest rate can be extremely difficult
depending on many factors.


I plan to source my
data for the study mainly from Bloomberg with small other parts coming from
national databases e.g. CEO. I may also conduct a survey if this is more
feasible due to a small number of recent publications in this area of study and
due to the major change in the last few years to negative rates. In my
methodology I will attempt to find how interest rates affect consumption,
inflation, unemployment, household savings and disposable income. I will run
also regressions on the data to find what variables change with respect to
interest rate changes and what the elasticity of these explanatory variables
are. I will use cross sectional data in order to find how the explanatory
variables are affected by the change in the interest rate, this will involve
linear and multiple regressions to find what are the effects, and how much
change one variable causes in another variable.

For my data analysis
I plan to use SPSS, which is a statistical analysis software. This software
will aid me when running regression analysis and interpreting the data.  I will use quantitative data to conduct my
study as I feel that this type of data will give me more accurate results and
be much easier to interpret for the reader. I will not use qualitative data as
I feel that people will be able to express their deep beliefs and rationale and
this may make the data very difficult to analyse. My data will be closed ended
and this will provide me with optimal data for my SPSS regression analysis.

For the purpose of
the study I will focus on findings that are comparable to the literature, I
will conduct several linear and multiple regressions over the population and
samples if necessary. I will also conduct regressions on people over the age of
60 in order to compare findings to (Kapoor and Ravi, 2009).
One of the main sources of my literature will come from google scholar,
business source complete, emerald management and Stella search. The gathering
of the data is from readily available sources and will not cause and
confidential or ethical issues as the data is legally available to anyone who
chooses to look at it.

There may be some
small limitations to my work as I am a novice researcher. Another small
limitation to the research is the emergence of negative interest rates, I will
speak about the prevalence of these rates in previous years and how they may
affect consumption but some parts of the findings may be difficult to compare
due to different interest rate policies in different years and countries.

I plan to work on
the dissertation throughout the semester with the hope of having 30-40% of it
complete by exam time (hopefully more depending on workload throughout then
semester). I will have my data also collected by then so the statistical
analysis will be conducted as soon as my exams finished. If all goes well I
would expect to complete my dissertation before July, if so, I will have ample
time to make any changes I may need to make to the document.

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