Economics 312

Theory and Practice of Econometrics
Spring 2018
Course Information

Course Content
Class Format
Prerequisites
Office Hours
Exams and Other Assignments
Grading
Texts and Software

Course Content

Econometrics is the application of statistical techniques to the analysis of economic data. It has its basis in pure mathematical statistics, but has developed as a distinct branch of the parent subject in order to serve particular data-analysis needs often faced by economists. The best (perhaps the only) way to learn econometrics is to do econometrics. This course will emphasize hands-on application of econometric techniques with natural data, not textbook proofs of statistical theorems. The principal mission of this course is to provide students with a set of econometric tools that can be applied as needed in economic research, including thesis work.

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Class Format

This class meets from 2:40 to 4:00 on Mondays and Wednesdays in Vollum 120. Most classes will be a lecture/conference session that will examine econometric techniques and their applications. In addition to the regular class sessions, there will be a non-required support session on Friday afternoons at the same time and location. In the first weeks, these will be background sessions on Stata and simple matrix algebra. For most of the rest of the semester they will discuss the week's homework project and additional applications and variations that we lack the time to cover in the regular classes.

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Prerequisites

Economics: The only economics prerequisite is Econ 201. In practice, the more economics you have taken, the more applications of econometrics you will recognize as we proceed through the course.

Mathematics: Math 141 or equivalent background in statistical analysis is an important prerequisite. Students will be expected to have a working understanding of basic statistics, including the concepts of probability distributions, expected value and variance, estimators, unbiasedness, hypothesis tests, and confidence intervals. A very brief review of these topics is conducted January 18-19 for those whose background in statistics may be limited or rusty. Matrix and vector notation will also be used in class at times. For those with no background, a session covering basic matrix methods such as addition, multiplication, transposition, and using matrix inverses will be offered through the Quantitative Skills Center early in the semester.

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Office Hours

The instructor will hold office hours in Vollum 229 on Mondays and Wednesdays from 10:30 to 11:30 and Thursdays from 10-11. Students for whom these hours are inconvenient may make appointments at other times by contacting the instructor at extension 7308 or by email to parker@reed.edu.

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Exams and Other Assignments

Exams: There will be a mid-term exam and a comprehensive final exam. Both exams may have in-class and/or take-home parts. There will be no term paper for the course.

Daily problems: There will be a short question or problem related to each day's class topic that should be submitted at the beginning of class. The intent of these assignments is to help us use class time more efficiently by focusing students' attention on an important point that we will cover. In most cases, these assignments should take only a few minutes once you have done the day's reading. If it's taking you more than a half-hour or so to do this work, then you should submit what you have done and ask related questions in class. These assignments will be not be formally graded as right or wrong (although it's always better to get them right), but rather assessed on the basis of meaningful engagement and preparation. It is not expected that every students will complete every daily assignment, but missing on a regular basis is not acceptable.

Weekly econometric projects: An applied project using statistical software to estimate models will be assigned most weeks. Detailed information about assignments will be posted weekly on the Web site. The weekly econometric projects will usually be done by teams of two students, who jointly submit a single collaborative report. Guidelines for collaboration on the projects and a sample report are posted on the Web site. The instructor will assign teams; you will work with a different partner each week. Reports are to be submitted by electronic mail no later than midnight Wednesday night. The instructor will read the reports and send email comments to each student. We will often devote some time during the Friday supplemental sessions to discussion of the projects. Because of the short turnaround time between the submission deadline and the class discussion, late work will be severely penalized. Projects received between midnight Wednesday and midnight Thursday will receive half credit. Projects more than 24 hours late will not be accepted.

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Grading

Grades will be based on all information the instructor has about your level of understanding of econometrics. This includes evidence from exams, homework, projects, class participation, and individual discussions.

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Texts and Software

Text: The main text for this course is R. Carter Hill, William E. Griffiths, and Guay C. Lim's Principles of Econometrics, 4th ed. (HGL). This is a modern text that covers recent developments in econometrics. It has extensive examples of applications and good problems, both theoretical and applied. Students will be expected to have unlimited access to this book, which is available in the Reed Bookstore. A couple of copies will be on reserve. Datasets referred to in the text (and used in the examples and problems) are available from the publisher's Web site.

Other Texts: There are several econometrics textbooks on reserve. Some of these are less mathematical than HGL; others are more rigorous. Most sections of the reading list have references to relevant sections of these texts that cover the same topic. There will be some required reading assignments from these alternative texts, but most of the time you are simply encouraged to explore these texts if you find that our presentation is inappropriately easy or difficult.

Software: Students will use the statistical package Stata 15 (or an earlier version) for most course assignments. This software is available on the computers in the IRCs and the PPW. If you are interested in having your own copy of Stata for either PC or Mac, you may purchase a one-year student license to the full version of Intercooled Stata 15 from the Stata Web site. A full set of Stata manuals is on reserve in the library. In addition, any section of the full printed documentation is available in pdf form from within Stata.

There is a useful companion for the HGL text called Using Stata for Principles of Econometrics. It provides information on the Stata commands that are useful to implement the methods discussed in each chapter of the text. Copies of this book will be available on reserve and at the ETC help desk. 

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