Topic 1: Introduction Flashcards
What does empirical analysis do?
Uses data to test a theory or to estimate a relationship.
What is an economic model?
A mathematical equation that describes a relationship.
What is an error (disturbance term)?
Unobserved variables or errors in measuring.
What is cross-sectional data?
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.
What is time series data?
Observations of a variable, or several variables, taken from a single individual, firm or country over time. Difficult to take random samples in.
What is panel data?
Consists of a time series for each cross-sectional member in a data set.
What is pooled cross sectional data?
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.
Property of Sums for a constant, sum of c
= nc
Property of Sums for a constant times xi, sum of cx_i
=c * sum of x_i
Property of Sums for n pairs with constants a and b, sum of (ax_i + by_i)
=(a * sum of x_i) + (b * sum of y_i)
sum of (a + by_i)
= na + b * sum of y_i
sum of (x_i - xbar)
= 0
Property of sums, multiplication
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
Stata: # of observations for a variable, mean, standard deviation, min and max values
sum var
Stata: percentiles, median, variance, skewness, kurtosis details
sum var, d
Stata: Lists all data points, lists observations that meet parameter
list, list if var = n
Stata: stops list function
break (x button)
Stata: makes a table with observations, frequency, percentile, and cumulative percentile
tab var
Stata: count how many observations meet that parameter
count if var = n
Stata: make a histogram of certain parameters.
histogram var
Stata: make a scatterplot with y on vertical and x on horizontal axes
twoway (scatter y x)
Stata: make a new variable equal to some parameters
gen var=
What is econometrics?
Using data to answer a specific causal question, how does an increase in x affect the outcome, y?
What is longitudinal data?
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.
What is the sum of x_i equal to in terms of xbar?
nxbar = the sum of x_i
what is xbar equal to in terms of a sum?
xbar = (1/n) * the sum of x_i
What is an important difference between a stats course and an econometrics course?
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.
What is the sum of squared deviation?
the sum of (x_i - xbar)^2, which is equal to the sum of x_i - n(xbar)^2
Does the expected value of the sum of (a_i*x_i) equal the sum of (a_i * the expected value of x_i)?
Yes.
What kind of distribution does the sample mean of a variable have?
It has an asymptotic standard normal distribution, by the central limit theorem when it is standardized, even if the variable is not normally distributed.
What is the formula for the variance of a random variable x?
Var(x) = Sigma^2 = E[(x - mu)^2]
Expected Value addition property
E[x+y] = E[x] + E[y]
Expected value constant property
E[cx] = cE[x]
For independent variables, what does E(y|x) = ?
E(y) since they are independent.
What is the formula for z score?
z = (x - mu)/sigma
Stata: get the number of observations where a variable equals some parameter
count if var =
What is the formula for correlation between x and y?
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)
Does E[(X - mu)^2] equal [E(X)]^2 - mu^2?
No, it equals E(X^2) - mu^2
