Topic 1: Introduction

Question 1

What does empirical analysis do?

Answer 1

Uses data to test a theory or to estimate a relationship.

Question 2

What is an economic model?

Answer 2

A mathematical equation that describes a relationship.

Question 3

What is an error (disturbance term)?

Answer 3

Unobserved variables or errors in measuring.

Question 4

What is cross-sectional data?

Answer 4

a sample of individual persons, firms, or countries taken at one point in time. A random sample of individuals are taken from a population of individuals.

Question 5

What is time series data?

Answer 5

Observations of a variable, or several variables, taken from a single individual, firm or country over time. Difficult to take random samples in.

Question 6

What is panel data?

Answer 6

Consists of a time series for each cross-sectional member in a data set.

Question 7

What is pooled cross sectional data?

Answer 7

A kind of panel data with cross-sections randomly sampled from a population for a time period. Each cross-section has different individuals. Differs from panel data in that you use the same cross sectional units over a given time period. Good for difference estimation.

Question 8

Property of Sums for a constant, sum of c

Answer 8

= nc

Question 9

Property of Sums for a constant times xi, sum of cx_i

Answer 9

=c * sum of x_i

Question 10

Property of Sums for n pairs with constants a and b, sum of (ax_i + by_i)

Answer 10

=(a * sum of x_i) + (b * sum of y_i)

Question 11

sum of (a + by_i)

Answer 11

= na + b * sum of y_i

Question 12

sum of (x_i - xbar)

Answer 12

= 0

Question 13

Property of sums, multiplication

Answer 13

the sum of (x_i*y_i) does not equal the sum of x_i * the sum of y_i. This is the same for the sum of (x_i )squared

Question 14

Stata: # of observations for a variable, mean, standard deviation, min and max values

Answer 14

sum var

Question 15

Stata: percentiles, median, variance, skewness, kurtosis details

Answer 15

sum var, d

Question 16

Stata: Lists all data points, lists observations that meet parameter

Answer 16

list, list if var = n

Question 17

Stata: stops list function

Answer 17

break (x button)

Question 18

Stata: makes a table with observations, frequency, percentile, and cumulative percentile

Answer 18

tab var

Question 19

Stata: count how many observations meet that parameter

Answer 19

count if var = n

Question 20

Stata: make a histogram of certain parameters.

Answer 20

histogram var

Question 21

Stata: make a scatterplot with y on vertical and x on horizontal axes

Answer 21

twoway (scatter y x)

Question 22

Stata: make a new variable equal to some parameters

Answer 22

gen var=

Question 23

What is econometrics?

Answer 23

Using data to answer a specific causal question, how does an increase in x affect the outcome, y?

Question 24

What is longitudinal data?

Answer 24

Following the same individuals over a period of time, s you have the same observations in each period until period time cap T. Very powerful for fixed effects estimateion.

Question 25

What is the sum of x_i equal to in terms of xbar?

Answer 25

nxbar = the sum of x_i

Question 26

what is xbar equal to in terms of a sum?

Answer 26

xbar = (1/n) * the sum of x_i

Question 27

What is an important difference between a stats course and an econometrics course?

Answer 27

The degree to which the course focuses on estimation bias by endogenous variables. Statistics assumes you are working with an experiment where the treatment is randomly assigned; econometrics focuses on causal questions using non-experimental data.

Question 28

What is the sum of squared deviation?

Answer 28

the sum of (x_i - xbar)^2, which is equal to the sum of x_i - n(xbar)^2

Question 29

Does the expected value of the sum of (a_i*x_i) equal the sum of (a_i * the expected value of x_i)?

Answer 29

Yes.

Question 30

What kind of distribution does the sample mean of a variable have?

Answer 30

It has an asymptotic standard normal distribution, by the central limit theorem when it is standardized, even if the variable is not normally distributed.

Question 31

What is the formula for the variance of a random variable x?

Answer 31

Var(x) = Sigma^2 = E[(x - mu)^2]

Question 32

Expected Value addition property

Answer 32

E[x+y] = E[x] + E[y]

Question 33

Expected value constant property

Answer 33

E[cx] = cE[x]

Question 34

For independent variables, what does E(y|x) = ?

Answer 34

E(y) since they are independent.

Question 35

What is the formula for z score?

Answer 35

z = (x - mu)/sigma

Question 36

Stata: get the number of observations where a variable equals some parameter

Answer 36

count if var =

Question 37

What is the formula for correlation between x and y?

Answer 37

Cor(x,y) = [the sum of (x_i - xbar) * (y_i - ybar)] / sqrt[ sum of (x_i - xbar)^2 * (y_i - ybar)^2]

or cor(x,y) = cov(x,y) / (sigma_x * sigma_y)

Question 38

Does E[(X - mu)^2] equal [E(X)]^2 - mu^2?

Answer 38

No, it equals E(X^2) - mu^2