Economics 312

Spring 2011
Econometric Project #1

Due 6am, Tuesday, February 15

Hill, Griffiths, and Lim, Problems 2.10 and 2.15

This project involves doing two of HGL's applied problems from Chapter 2. You will work in teams of two students each, as assigned below. While some specialization is acceptable, do not just divide these problems with one member of your team doing each one. Both members of the team must contribute to the estimation and report-writing of both problems. For more details on what is expected in terms of collaboration and your report, refer to these guidelines and this sample report.

For this assignment, your report should be in two separate parts, one for each of the problems.

We will do a brief, in-class orientation to Stata; Chapters 1 and 2 of Adkins and Hill's Using Stata for Principles of Econometrics will give you more details on the Stata procedures needed to perform the computations in Chapter 2.

Problem 2.10 is an application of the capital-asset pricing model. The problem itself gives about two paragraphs of background on this foundational model of financial economics. For more details, you are encouraged to read Chapter 2 of Ernst Berndt's The Practice of Econometrics.

Problem 2.15 examines a question that should be of great interest to all of you: How does the amount of education affect a person's wage? We will revisit the wage question later in the course using more advanced methods; for now we must be content with our simple regression techniques.

Links to Datasets

Note: The .dta file is a Stata dataset that should be downloaded and opened in Stata. The .def file is a text file with definitions of the variables and sample statistics. Open the latter in any text editor.

Problem 2.10: capm4.dta capm4.def  corrected capm4.dta corrected capm4.def
Problem 2.15: cps4_small.dta cps4_small.def

Project Teams

Project teams for the first assignment are below, with partners for this assignment shown in the rows of the table. The list is based on the students who have attended class and are currently enrolled. With an odd number, one person will work alone on each project. If a student should drop the class this week, we'll pair up his or her former partner with an unmatched student if that is feasible. You should make contact with your partner as soon as possible to arrange a work schedule.