# MTguide(1) - Econ 4010 Introduction to Econometrics(Spring...

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Econ 4010: Introduction to Econometrics (Spring 2016) Midterm Guide Olivier Parent ( [email protected] ) Instructions The midterm exam will consist of several problems. These will be similar to the homework assignments. There will be some calculations. While I will endeavor to make the cal- culations relatively simple, you will have to bring a calculator to the exam. Material covered on the midterm includes: 1. Introduction (a) Random Variable: E ( ag ( X 1 ) + bh ( X 2 )) = aE ( g ( X 1 )) + bE ( h ( X 2 )) var ( aX + bY ) = a 2 var ( X ) + b 2 var ( Y ) + 2 abcov ( X, Y ) cov ( X, Y ) = 0 if X and Y are independent corr ( X, Y ) = cov ( X, Y ) / ( sd ( X ) sd ( Y )) (b) sampling distribution If Y i N ( μ, σ 2 ) then

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Unformatted text preview: σ 2 N ) (c) Conﬁdence Interval: → [ g 1 ,g 2 ] = h ¯ Y-s √ T t α/ 2 ,T-1 , ¯ Y + s √ T t α/ 2 ,T-1 i → margin of error: s √ T t α/ 2 ,T-1 (d) Hypothesis Testing 2. Structure of Economic Data (a) Data Transformation → Δ Y t Y t-1 = Y t-Y t-1 Y t-1 → log( Y t )-log( Y t-1 ) ≈ Δ Y t Y t-1 when Δ Y t Y t-1 is small → 100 * Δ log( Y ) ≈ %Δ Y (b) Simple Linear Model → Let y = a + bx → marginal eﬀect Δ y Δ x = b (c) Log-linear model ± ln( y ) = a + b ln( x ) ± elasticity is b = Δln( y ) Δln( x ) = Δ y y / Δ x x...
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