ECO 231W

Undergraduate Econometrics

Project is graded

The project is graded, and will be in the class boxes in Harkness. The grades correspond to the percentile where your project falls in comparison with your colleagues. There were some pretty impressive approaches. Well done!

Final preparation

Please check the Final entry in the Assignments page for details about the Final. Also, observe that there are several hours of Live Help events the day before the exam.

1. The final will have the same style as the midterm, and several questions in the same style. It will have questions about whether a variable should be included or not, omitted variable bias, and coefficient interpretation.

2. There will be questions about hypothesis testing. You will be asked to “answer a question,” which means that you will have to set up a test, from the null hypothesis to the rejection rule.

3. There may be a question asking the assumptions required for one of the theorems covered in class, or asking you to enunciate an entire theorem, including the assumptions. Always describe the assumptions in detail, like I did the first time I presented each one of them in class. I may ask you to interpret or explain some assumptions, or the meaning of a theorem and why it’s important.

4. There will be several questions examining different failures of MLRs, including one or more of the following: misspecification of the functional form, sample selection, missing data, measurement error, multicollinearity, and heteroskedasticity.

5. There will be a question about proxy variables.

6. There will be questions about instrumental variables, and you will have to argue whether a certain variable is an instrument.

7. There may be a math question. As usual, the point will not be to show math prowess, but rather to measure if you understand and can use the basic math principles required in this course, such as conditional expectations, and summation operations.

8. My questions are rarely abstract. You will be asked all of the above within the context of a specific model, and you should answer with respect to said model.

9. As before, you can always improve on your answers, so you must keep the time carefully. This exam tries to measure your ability to conduct applied research on your own, so you must answer the questions showing your independence. Maturity and clarity of thought show up in the answers, so try to be precise and prioritize. If you have extra time, then come back and consider details, mention puzzling aspects, etc.

10. There will be an essay question, which is worth between 20 and 30% of the exam grade. There I will give you a research question, which may not even be completely defined, and ask you to describe how you would carry out a research project about it. You must base your answer on the last class (which is of course dependent on the entire course). You must consider the following:

a) The question has to be precise. It has to involve the relation between a clear dependent variable and a clear explanatory variable. I may give you an imprecise question, you must refine it to a tractable degree.

b) You must understand what is hard about the question.

c) You must write a model that tries to tackle the question difficulties.

d) You must speak about the data. Can you find the variables you need in a ready survey? What are you looking for in the data set? What do you realistically expect to find in a data set, and what may be difficult? Are you concerned about the way the data was collected, meaning, are there specific data collection strategies that could occur in your problem to which you would give preference, or which you would like to avoid? Is there any modification in your data you expect to do, such as eliminating variables, clumping variables, eliminating observations, etc?

e) You must consider how you would come up with proxies for possible unobservable variables. Which variables that may exist in a real-world data set could be used as proxies for what you need? Include them in the requirements for your data set.

f) You must allow that you will not find proxies for everything. What do you think will still remain in the error term? How will this impact your estimates?

g) How will you tackle general possible failures in your assumptions, such as misspecification of the functional form, heteroskedasticity, or non-normality?

h) Which hypothesis tests, if any, would you perform? Describe the test.

i) What is the result you expect to find, and why?

j) What are the recommendations for policy that your results would imply? Consider the implications for all possible
results, not only for the result you expect.

k) What do you expect to tell your readers with respect to your results? In light of the major issues you expect to find in your research project, what do you expect to have to say as words of caution to your readers?


Best of luck on Sunday, though luck is hardly necessary.

Happy Holidays!

Special study group session

Anne Elise will be holding an extra study group section this Thursday 12/15, 12:30-1:30 at MEL 221.

Homework 5 is posted

Find it in the assignments page. It is not mandatory. You can discuss the questions in the Forum.

Final project is posted

The final project explanations and rules are posted. Find them in the Assignments page.

The project is a written essay. The quality of the writing counts towards your grade. In fact, it counts even more than the amount of points we assign it. We are human, and a well written piece will have us reading it with more pleasure, with a more positive attitude. Hence, the easiest way to increase your grade is to have your essay revised by an editor. It’s a true arbitrage opportunity, with minimal effort you can get very high rewards. This is even more important if English is not your native language. The university provides many editing services for free. Read about them in the Resources section in the About page.

You must have a plan about how you will organize your assignments in the coming weeks. Check the calendar. If you only start homework 4 after Thanksgiving, you may have difficulty completing the project in time. Go ahead and simply think about how you will approach your studies in the coming weeks.

Homework 4 is posted

Find it in the Assignments page.

ATTENTION: In homework 4, the theoretical part is worth 18 points. The empirical part is worth 2 points.

Always READ and FOLLOW THE RULES. Though they haven’t changed since the beginning, the punishment for disobedience gets stricter with every passing homework.

No office hours this Friday

I will not be holding office hours this Friday. I have a doctor’s appointment that could not be scheduled at a different time. If you were planning to come to my office hour this week, e-mail me, so we can figure out what to do in your case.

Special office hour: Linda

The undergraduate TA Linda will be offering her office hour on Tuesday 11-1 this week, because of the paper replication. Check details about this extra office hour in the Calendar.

Applied TA office hour

The Applied TA has graciously offered to provide a special office hour to aid in the paper replication. He will be seeing students tomorrow Friday 11/11 3:00-5:00 p.m. on Meliora 219.

Hints for paper replication

The Applied TA Tuo has been so kind to write a document with further suggestions that can help you complete the paper replication. You can download it here. I must reiterate the need for you to start this replication soon.

Paper replication

The information for the paper replication is published in the assignments page. It is due on Wednesday 11/16. The Applied TA is holding extra office hours in the coming 2 weeks. Check the calendar.

Midterm preparation

Please check the Midterm entry in the Assignments page for details about the Midterm. Also, observe that there is a special Live Help Event that will be held by Linda on Sunday from 3 to 5 pm. The following are recommendations that might help you study.

1. The midterm will surely have questions about whether a variable should be included or not, and why. It will also have questions about omitted variable bias. Most likely I will ask you to compare models with and without certain variables, and ask what happens to the OLS estimators, both with respect to the bias and the variance.

2. There will be a question that asks you to interpret coefficients. Learn how to interpret B0 and the slope coefficients, both with regular variables as well as dummies.

3. There may be a question designed to test your familiarity with the manipulations of conditional expectations. I may test your knowledge of summations indirectly, but this will not be the focus.

4. There may be a question asking the assumptions required for one of the theorems covered in class, or asking you to enunciate an entire theorem, including the assumptions. Always describe the assumptions in detail, like I did the first time I presented each one of them in class. I may ask you to interpret or explain some assumptions, or the meaning of a theorem and why it’s important.

5. There will be a question on hypothesis testing. It will require that you set up a hypothesis test completely from the statement of the null hypothesis to the rejection rule. You will not be required to know specific distributions, not critical values other than the 5% one we always mention (1.96). I may ask you to relate the p-value to the test you set up.

6. Usually my questions will not ask you to do all those things abstractly. Rather, I am more likely to pose a specific model, or a situation, and ask you to reason about those things inside the particular example. It is no use to memorize certain principles and rules if you cannot apply them to real life research questions.

7. Most questions in the exam can be answered in many different ways. It is possible to be wrong, but there can be many different right answers. It is ok if you believe that the answer to a question is “I am not sure,” as long as you can defend what is puzzling about the situation, and your answer makes sense. That said, there are better answers than others, so it is not only about being right, but rather about how completely you can analyze the problem. Remember that in this course there is always a way to improve your answers, so you must also choose when to stop and concentrate your efforts on a different question. Don’t get greedy and waste time.

8. You will be pressed for time. This is partly due to the extremely subjective nature of many of the questions. However, the exam is highly predictable. You can prepare in advance for most questions, and only adapt what you prepared for the specific example in the exam. A student that prepared in advance and dominates the material will tend to be faster than the rest, so I understand that the time is acting here as a tool to separate different levels of maturity about the subject taught in this class. There will be no catch nor any question that requires you to be smart or creative under pressure if I can avoid it. Therefore you will not do worse in this test because you can’t have ideas on the spot.

9. Always remember that this course is graded on a curve, and that the curve in this course is higher than in most other courses. This means that the proportions of A, A-, B+ etc. is much larger than in other courses. Hence, judge the exam and your performance in comparison with others. People seem to forget this and are often positively surprised at the grade they get in the end of the course. Though I try, I am not writing an exam to get a perfect 60% average, or something of the sort. Instead, I am thinking about what you should know, and asking you exactly that. This is why I tell you what will be in the exam. Remember that I could always have made it easier, but I could also have made it harder. I choose exactly the questions that give me a sense of your level of absorption, so I can make corrections to the way I teach, not the way I test you.

Best of luck on Wednesday, though luck is hardly necessary. Make good use of the resources until then.




Homework 3 answer sections

Homework 3 will be handed back on Monday, so you can have the answers before the Midterm. There will be two answer sections, one on Monday, and one on Tuesday. The grading TA will bring the homeworks to the Monday answer section. Therefore, if you would like to attend this section, you can have your homework back then. He will give the remaining homeworks to the section TA, and she will hand them on the Monday review sections. Check the Calendar for the exact times and locations of this week’s answer sections. After then, you can pick up your homework in the boxes at Harkness.

Homework 3 typo

Question 3, item 4 has a typo. I wrote two beta_6, when in fact the last one should have been beta_7. I fixed it.

About the answer sections

The answer sections seem to be pretty empty. We are considering eliminating the Thursday grading sections, since only 3 people showed up each time. If you have any concerns or ideas regarding the grading sections, then please write them up in the Administrative part of the Forum. We have very little information about why people are not showing up, and we are basing our decisions on that. Please let us know how we can improve your life without overburdening the grading TA with sections that are attended by so few.

P.S.: I will not provide handout answers to the homeworks. We all know what happens when answers are available to be passed down to the upcoming classes, and producing good questions is hard. If I didn’t care that you learned the material, I would pretend I don’t see what is happening, and let you copy and waste your time and opportunities. I can’t do that to you, and the same way I can’t do the to the future classes. This is why we offer answer sections. If they are unsatisfactory, let us know why.

Bring project paper to class today

Remember to print and bring the project paper to class today. Find the link on the Assignments page, under Paper Replication.

No office hours this Friday

I will not be holding office hours this Friday. I will be out of town both Thursday and Friday. If you were planning to come to my office hour this week, e-mail me, so we can figure out what to do in your case.

Homework 3 is posted

Find it in the Assignments page. Always READ and FOLLOW THE RULES. Though they haven’t changed since the beginning, the punishment for disobedience gets stricter with every passing homework.

Homework 2 announcements

1. I am taking Q13 off the homework. It refers to the material of today’s class, so it’s too advanced. It will be included in homework 3, so if you already worked on it, all the best. You will follow today’s class much better, and you already did some work for the coming homework, so no loss. If you do not read this announcement in time, and hand it anyway, it will simply not be graded. When you get your homework back next week you can use what you did towards homework 3.

2. Q2.4 referenced question 1.3, when in fact it should be Q2.3. I fixed this. The reference is wrong because I had to change the homework from it’s first version (where Q2 was actually question 1).

Special grading section this Monday

Due to some confusion about the time of the grading section, Umair will be offering a special grading section to go over homework 1 this Monday 10/03, 1:00-2:00 p.m. It will be held on the computer lab in the basement of Harkness. The basement entrance is beside the 115 classroom.

Homework 2 correction

When I was modifying Homework 2 there was a phrase: “Class 7: Book problems 2.7, 2.11,...” that escaped me. This line should have been deleted. These exercises are not required for the homework. I posted a new version that does not have these.

IMPORTANT: Homework 2 reposted

At exactly this time I am reposting homework 2. You can find it in the assignments page. This is the homework version you have to hand in, ignore the previous version. If you were working on the previous version, you have to check whether your work can be used in the new homework, since most of the homework questions have changed.

Homework 2 is posted

Find it in the Assignments page. Take a look at it soon, it is long, and harder than homework 1. Also: READ THE RULES, there are no excuses for disobeying them.

CETL study group

The CETL study group is up! It will meet on Fridays at 2 p.m., and be led by Anne Elise, who is also your section TA. If you are interested, visit the CETL website to sign up and learn about location.

Data set for the Stata section

You can download the data set of the Stata section here, the example .do file here, and the slides here.

Homework 1 is posted

Find it in the Assignments page. Take a look at it soon. The homework is long, and you may want to get started early.

Calendar, office hours and other activities posted.

The class calendar is updated. It has all the activities related to this course, including locations, and assignments due dates. It also has the extra office hours and sections scheduled before important assignments. Notice that all TA related activities begin after the Wednesday class.


Coming up soon:
Homework 1

TA contact posted

TA names and contact information are posted. You can see them here.


Coming up soon:
Office hour schedule.
Section schedule.
Live Help Events schedule.
Homework 1

Class Plan is posted

Coming up soon:
TA names and contact information.
Office hour schedule.
Section schedule.
Live Help Events schedule.
Homework 1