econ 140 8 - ECONOMICS 140 Professor Enrico Moretti...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ECONOMICS 140 Professor Enrico Moretti 3/29/2010 Lecture 8 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ANNOUNCEMENTS I thought the midterm went fine. The mean is 39, the standard deviation is 11, and the median is 37. I thought you guys did fine in general and I also thought it was not too hard a midterm. I think we're in good shape in this class. We'll have one last set of exercises just before the final. We'll have an extra practice problem set during RRR week to help you prepare for the final. We are at the point where you guys have learned basically 70% of modern econometrics. Problem set 6 will be posted online tonight. Problem set 5 is due Wednesday at noon. LECTURE Today we will finish Chapter 12. In particular we will cover more examples of dummy variables and f-test. Then we will cover the first part of Chapter 13. Chapter 13 and 14 are about real-life scenarios when the assumptions we make in our models fail. We will look at one assumption at a time and ask what happens if the assumption is not true. We will see which is the most serious violations of the model are, which the least serious violations of the model are, and how to fix them. Qualitative Independent Variables Qualitative independent variables include variables such as gender or region. These are things that don’t have a number associated to them and describe a quality. For example, let’s look at the relationship between aggregate income and aggregate consumption. Exercise: How do we get B2? We run regression and estimate it. There is a problem when we run regression because there seems to be two, a larger one and a smaller one of 5-6 years. It seems like the model is not a very good description of data. This 5-6 year period is World War II, when people were consuming much less then they usually would. There was a lot of uncertainty and people were trying to consume as little as possible. How do we make this model consistent with data? We create new variable to account for the war years.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Economics 140 ASUC Lecture Notes Online: Approved by the UC Board of Regents 3/29/2010 D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. 2 = 1 if t = 1941 … 1946 = 0 otherwise δ allows consumption and income to be different in those years. We would expect δ to be negative based on the way I drew the graph.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

econ 140 8 - ECONOMICS 140 Professor Enrico Moretti...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online