Introduction to Econometrics - Fall 2014

Jose M. Fernandez

Tuesdays and Thursdays from 11am - 12:15pm

Office Hours

Office hours: Tuesdays 1:30pm - 3:300pm BS 159 of by appointment.

Materials

What is Econometrics?

Formal Definition:

Informal Definition:

What does this mean for you?

Grading

Type of Assignment Percentage
Computer Assignments 20%
Quizzes 20%
Midterm 15%
Final 25%
Project 20%

Keys to Success in this Class

Keys to Success

Topics to be covered

  1. Review of Business Statistics and Hypothesis Testing
  2. Simple Linear Regression
  3. Multivariate Linear Regression
  4. Transformation of Variables
  5. Dummy Variables
  6. Simultaneous Equations
  7. Discrete Choice Models
  8. Panel Data

Mathematical Notaion: Summation

Let \(x\) be a random variable.

Take \(n\) draws from this distribution.

The sum of these draws is given by

\[ x_{1}+x_{2}+ . . . + x_{n}=\sum_{i}^n x_{i} \]

Mathematical Notation: Mean

The mean or average is defined as

\[ \bar x=\frac{1}{n}\sum_{i}^n x_{i} \]

Mathematical Notation: Variance

The variance is defined as the average squared deviation from the mean.

  1. Average
  2. Squared Deviation
  3. Mean

Population variance \[ \sigma^2 = \frac{1}{n}\sum_{i=1}^n (x_{i}-\mu)^2 \]

Sample variance

\[ s^2 = \frac{1}{n-1}\sum_{i=1}^n (x_{i}-\bar x)^2 \]

Special Summations

Geometric Series

\[ \sum_{i=1}^n b^i = \frac{1-b^n}{1-b} \]

Special Summations

Gauss Sum

Special Summations

Gauss Sum

Newton noticed the following pattern.

alt text

101*100 = 10,100, but he counts everything twice

The answer is 10,100/2 = 5050

Special Summations

Gauss Sum: Check the formula by adding the numbers from 1 to 4.

\[ \sum_{j=1}^J j = \frac{(J+1)J}{2} \]

Special Summations

If x and y are random variables, then

\[ \sum_{k=1}^n (x_{k} + y_{k}) = \sum_{k=1}^n x_{k} + \sum_{k=1}^n y_{k}\]

if \(\alpha\) is a constant, then

\[ \sum_{k=1}^n \alpha x_{k} = \alpha \sum_{k=1}^n x_{k} \]

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