ECON 490
Introduction to Econometrics
Spring 2004

Instructor:

Professor Herman J. Bierens
Office: 510 Kern.
Email: hbierens@psu.edu
Office hours: 2-4 PM Wednesday, and by appointment.

Teaching assistant:

Li Wang
Office: 408 Kern.
Email: luw119@psu.edu
Office hours: Thursday 2:30-4:30 PM

Time and place:

M W F 10:10-11:00 AM in 124 AG ENGR

Goal

The goal of this course is to provide the students with the ability to understand and to formulate statistical models of economic relations, and to be able to test economic theories and to evaluate empirical economic models.

In particular, I will explain the econometric theory on the basis of the textbook and my lecture notes, and then show how to apply it, using the computer equipment in the classroom and my free econometrics software package EasyReg International.

Prerequisite level

I will build further upon what you have learned in ECON 390. If you have not passed ECON 390 (or an equivalent level statistics course) you cannot take ECON 490.

Required textbook

Stock, James H., and Mark W. Watson (2003): Introduction to Econometrics, Addison Wesley (First Edition)

Course outline

  1. Brief overview of probability and statistics [Ch.2-3]
  2. Review of calculus [Lecture notes]
  3. Linear regression with one regressor [Ch. 4, Lecture notes]
  4. Linear regression with multiple regressors [Ch. 5 + Appendices, Lecture notes]
  5. Functional form, nonlinearity, and specification [Ch. 6-7, Lecture notes]
  6. Logit and Probit models [Ch. 9, Lecture notes]
  7. Time series models [Ch. 12, if time permits]

Homework

Each week I will assign homework of theoretical, numerical and/or empirical nature. Homework assignments are designed to improve your understanding of concepts and help prepare you for exams. Homework assignments must be submitted in class. Homework submitted by email will not be accepted. No late homework will be accepted.

Software

Some homework assignments will require the use of econometric software. You may use whatever statistical or econometric computer software package that you are familiar with. Several are available on the network, such as Stata and E-Views. However, I will use my own free software EasyReg International for demonstrations in class. EasyReg (= Easy Regression) is a Windows based software package, which can be freely downloaded from my EasyReg web site. As the name indicates, EasyReg is very easy to use (just point-and-click), and comes with a wide range of web based guided tours.

Using the network version of EasyReg

If the network version of EasyReg does not work (it may give an Error 75 message), do the following:

  1. Open Start and look for EasyReg International, in course specific programs > E > ECON490.
  2. Right-click EasyReg International, move the mouse to "Send to" and left-click "Desktop (create shortcut)."
  3. Right-click the EasyReg icon on your desktop, and open "Properties."
  4. Change EASYREG.EXE in the box "Target:" to EASYREGN.EXE, and click the Apply and OK buttons.
  5. To run the network version of EasyReg, double-click the EasyReg icon on your desktop.

Read the EasyReg International web page to learn how to use the network version of EasyReg.

Grading

The course grade will be based on the homework (20%), two written midterm exams (25% each), and a written final exam (30%). The exams are cumulative. The homework has to be done individually, but occasionally I may allow you to work in groups of maximal three.

Doing the homework assignments is mandatory. If you skip a homework assignment without a valid excuse (see below) then each time

Thus, for example, if you skip six homework assignments without valid excuse then the average homework score (including the zeros) will count for 50%, the midterm exams for 12.5% each, and the final exam for 15%.

On the other hand, if you do all the homework seriously then the following favorable arrangements apply:

In all other cases your grade will be based on a weighted average of the homework and exam scores.

There will be no make-up exam. If you miss an exam without valid excuse then your score on this exam will be zero, and the favorable arrangement above will not apply. If you have a valid excuse for missing a midterm exam, the next exam will count for the missed exam as well.

Midterm exam dates

  1. Friday February 20, 2004
  2. Friday April 2, 2004

Final exam date and place

Wednesday May 5, 2004, 12:20P-2:10P in 121 SPARKS.

Spring break

March 8-12, 2004

Homework assignments

The empirical and numerical homework assignments will be posted here. The theoretical homework assignments (exercises from the textbook) will be announced in class and then also posted here.

  1. Textbook exercises 2.1, 2.2, 2.3, 2.4, 2.5, 2.7, 2.8, 2.10
    Due: Friday January 23.
  2. Textbook exercises 3.1, 3.2, 3.3, 3.4, 3.6, 3.8, 3.11 and calculus exercises 1, 2, 3, 4, 5, 6
    Due: Friday February 6.
  3. Textbook exercises 4.1, 4.2, 4.5
    Due: Monday February 23, but I recommend to do the homework before Friday 20, as preparation for the Midterm Exam.
  4. Empirical homework assignment 1.
    Due: Friday March 5
  5. Textbook exercises 5.1 to 5.9
    Due: Friday March 26.
  6. Textbook exercises 6.1 to 6.5
    Due: Friday April 9.
  7. Empirical homework assignment 2.
    Due: Friday April 16
  8. Empirical homework assignment 3.
    Due: Wednesday April 28

Lecture notes

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