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Lesson zero

ECONOMIC STATISTICS. Lesson zero. 1st Semester 2011/2012 inteRnational Business and development. Textbooks. Textbooks !! Required C. DOUGHERTY, Introduction to econometrics (fourth edition), Oxford University Press, 2011 , Only the following chapters : 1,2,3,4,5,6,7

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Lesson zero

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  1. ECONOMIC STATISTICS Lesson zero 1st Semester 2011/2012 inteRnational Business and development

  2. Textbooks Textbooks!! Required • C. DOUGHERTY, Introduction to econometrics (fourth edition), Oxford University Press, 2011 , Only the following chapters: 1,2,3,4,5,6,7 • E. GIOVANNINI, Understanding Economic Statistics. An OECD perspective, OCSE, 2008, Paris (http://www.oecd.org/dataoecd/37/12/38451313.pdf). Only the following pages (Chapter 2: pp. 42-57, Chapter 3: pp.66-76, Chapter 4 pp. 161-165 and pp.170-172) • G. GOZZI, Economic Statistics (part one and part two), Slides on all topics of the course (available at photocopying office) • Also, visit • http://econ.lse.ac.uk/courses/ec220/G/ec212.html • Further readings will be supplied during the course 0. Preamble 2011-12

  3. http://www.oup.com/uk/orc/bin/9780199567089/

  4. Recommended readings • L. C. ADKINS, Using Gretl for Principles of Econometrics, 3rd Edition. Version 1.311, 2010 (http://www.learneconometrics.com/gretl/ebook.pdf) • Manual for doing the computer exercises in Dougherty, C. Introduction to Econometrics (Oxford: Oxford University Press, fourth edition 2011) using gretl • http://www.oup.com/uk/orc/bin/9780199567089/01student/gretl/gretlmanual.pdf • Teaching methods Lectures and tutorials using Gretl: • http://www.american.edu/provost/ctrl/upload/Gretl.pdf • http://spot.colorado.edu/~mcnownr/gretl_lab/index.html 0. Preamble 2011-12

  5. As prerequisites • Recommended - 2 undergraduate courses in statistics in addition to a good command of algebra. You should have some notion about what random variables are, what a probability distribution is, what a statistic is, and what a hypothesis test is. • These are things that we will cover, but we move through them quickly. If you haven’t learned about these before, you’ll never be able to keep up. Previous experience of linear regression is not a prerequisite but would be very helpful. 0. Preamble 2011-12

  6. For those who do not have the prerequisites http://wps.prenhall.com/bp_berenson_bbs_10/32/8434/2159129.cw/index.html is recommended to look at the power point slides of the following chapters: 1, 2, 3, 4, 5, 6, 7, 8 and 9 0. Preamble 2011-12

  7. TIMES OF LESSONS 8 Monday 11-13 classroom K1 Tuesday 9-11 classroom K1 Wednesday 9-11 classroom K1 0. Preamble 2011-12

  8. General Rules But….Regular attendance is expected. Do not talk. If you have questions, I am here to listen. Students who disturb the lessons can stay in bed, go to the park or the bar (and still get 30 cum laude). 9 Please!! Turn off mobile phones I do not collect signatures forattendance. Those who are not interested can stay in bed, go to the park or the bar (and still get 30 cum laude). 0. Preamble 2011-12

  9. Assessment methods 10 Written final exam. The oral examination is optional - after the compulsory written exam - and might increase or decrease the overall result 0. Preamble 2011-12

  10. Grades Your grade in this class will be based on your performance in the final exam and on Chapter test assignments. The final assessment, for students who pass the written exam (at least 15/30), is the is the sum of the vote in written test exam and and the average of the score (between 0-10) in chapter test. 0. Preamble 2011-12

  11. Class and Text Reading Schedule Please not that the syllabus is an outline of topics I wish to cover - I may not cover all of them - and I may not cover them in the order listed . It is VERY IMPORTANT to keep yourself informed about what is going on in the class at a particular time. Again, it is important to bear in mind that parts of each class will be spent on discussing problems that I will assign from time to time or in answering questions. It is very important that you keep up with the material and take part in class discussions. I want this to be a semester long dialogue between us. Please feel free to ask questions during class and before the lecture starts and/or after it ends. 0. Preamble 2011-12

  12. How do we define our course Economic Theory Testing Theory Theory Economic Statistics Econometrics Forecasting Data Methodological Statistics Methods Policy Advice Economic theory makes statements or hypothesis that are mostly qualitative in nature. For example they would say that increased income would increase consumption. This Economic theory postulates a relationship but does not provide any numerical measure of relationship between the two. 0. Preamble 2011-12

  13. METHODOLOGY OF ECONOMETRICS Broadly speaking, traditional econometric methodology proceeds along the following lines: Statement of theory or hypothesis Specification of the statistical, or econometric, model Collecting the data Estimation of the parameters of the econometric model Hypothesis testing Forecasting or prediction Using the model for control or policy purposes. To illustrate the preceding steps, let us consider the well-known Keynesian theory of consumption. 0. Preamble 2011-12

  14. 1. Statement of Theory or Hypothesis Keynes states that on average, consumers increase their consumption as their income increases, but not as much as the increase in their income (MPC < 1). 2. Specification of the Statistical Model of Consumption (single-equation model) Y = β1 + β2X 0 < β2 < 1 Y = consumption expenditure and (dependent variable) X = income, (independent, or explanatory variable) β1 = the intercept β2 = theslope coefficient The slope coefficient β2 measures the MPC (Marginal Propensity to Consume). 0. Preamble 2011-12

  15. Geometrically, The results can be viewed in a Cartesian diagram 0. Preamble 2011-12

  16. WHY IS ECONOMIC STATISTICS A SEPARATE DISCIPLINE? The subject deserves to be studied in its own right for the following reasons: • Economic theory makes statements or hypotheses that are mostly qualitativein nature (the law of demand), the law does not provide any numerical measure of the relationship. This is the job of the economic statistician or the econometrician. • In English-speaking countries econometrics and economic statistics are two different disciplines. • Econometrics is mainly interested in the empirical verification of economic theory. • Economic statistics is mainly concerned with collecting, processing, and presenting economic data in the form of charts and tables. • But in Italy economic statistics also deals with the empirical verification of economic theory. 0. Preamble 2011-12

  17. http://economia.unipr.it/docenti/home.asp?id=43 giorgio.gozzi@unipr.it 18 0. Preamble 2011-12

  18. Econometrics Laboratory: Gretl Version (http://spot.colorado.edu/~mcnownr/gretl_lab/index.html) Here are links to pdf versions of powerpoint slides providing instruction on the use of gretl for implementing various econometric procedures.Introduction to gretl and the gretl labWorkshop 1: IntroductionWorkshop 2: BasicsWorkshop 3: Functional FormsWorkshop 4: cross-country growth – interpretationsWorkshop 4B: Gasoline demand – model specificationWorkshop 5: F-testsWorkshop 6: Dummy variablesWorkshop 7: MulticollinearityWorkshop 8: HeteroscedasticityWorkshop 9: Car Sales - autocorrelationWorkshop 10: Model specification 0. Preamble 2011-12

  19. Features of gretl Easy intuitive interface (now 6 languages) • A wide variety of least-squares and maximum-likelihood estimators, including systems estimators • Single commands to launch procedures: 0. Preamble 2011-12

  20. Features of gretl Output models as LaTeX files, in tabular or equation format • Integrated scripting language: enter commands either via the gui (graphical user interface ) or via script • Command loop structure for Monte Carlo simulations and iterative estimation procedures • Link to GNU (Free Operating System) R for further data analysis 0. Preamble 2011-12

  21. Features of gretl Best of all it’s free! • Open source philosophy – You are free to download and use gretl – You are invited to contribute additional features to the gretl project 0. Preamble 2011-12

  22. Accessing gretl Access to gretl can be found at the website: http://gretl.sourceforge.net/index.html • which provides instructions on downloading the program and reference manuals. 0. Preamble 2011-12

  23. Accompanying datasets On gretl homepage, click on “data for gretl” to see list of available datasets for teaching and research: • Datasets from econometrics textbooks • Large macroeconomic datasets from St. Louis Fed, Penn World Tables • Other specialized data sets. 0. Preamble 2011-12

  24. Instructional lab for gretl A set of exercises for learning gretl and practicing econometrics with real data. • Each is a set of instructions and a data set to illustrate econometric procedures • Posted on Robert McNown’s webpage http://spot.colorado.edu/~mcnownr/ • Instructional lab is also open source • Under continuing development. 0. Preamble 2011-12

  25. Questions 0. Preamble 2011-12

  26. questionnaireto fill in 0. Preamble 2011-12

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