Course Title: Basic Econometrics Full Marks: 100 Course No.: Pass Marks: 45 Nature of the Course: Theory Periods per Week: 3 Year: Second, Semester: Fourth Time per Period: 1 Hour Level: B.A. Total Periods: 50
1. Course Description: This course is intended to provide an introduction to the theory and applications of econometrics. Econometrics is the art and science of the testing economic models. The course will focus on the methods for analyzing data in Economics. Emphases are placed on regression analysis. The course incorporates seven units. The first unit deals with the nature of econometrics and economic data. The second unit discusses the concept of random variables and normal distribution. Likewise, the third unit deals with the covariance, variance and correlation. The fourth unit deals with the simple regression analysis. The fifth unit discusses on the multiple regression analysis. The sixth unit concerns with the transformations of variables, and regression analysis. Finally, the seventh unit introduces dummy variables.
All topics are discussed with emphasis on interpretation of econometric results and their economic application. Case studies and current economic trends and developments are examined in Nepalese and global perspectives as far as possible. Students are assumed to be familiar with elementary statistics, and are expected to learn and use statistical software in the course.
2. Course Objectives: The general objectives of the course are as follows: To acquaint the students with introduction of econometrics and economic data. To help the students to conceptualize random variables and normal distribution. To enable the students to discuss covariance, variance and correlation. To discuss simple regression analysis. To enable the students to analyze multiple regression analysis. To help the students to use logarithms for transformation of variables. To acquaint the students with the dummy variables in economic analysis.
3. Specific Objectives and Contents:
Specific Objectives Contents Explain the meaning of econometrics. Discuss the methodology of econometrics. Analyze the types of economic Unit I: The Nature of Econometrics and Economic Data (5) 1.1 Meaning of Econometrics 1.2 Methodology of Econometrics 1.3 Types of Data data. Explore the sources of data. 1.3.1 Time Series Data 1.3.2 Cross-Section Data 1.3.3 Pooled Data
1.4 Sources of Economic Data
Explain the concept of random variables. Analyze normal distribution. Unit II: Random Variables and Probability Distributions (5) 2.1 Random Variable 2.1.1 Meaning of Random Variable 2.1.2 Types of Random Variables: Discrete and Continuous Random Variables 2.2 Probability Distributions 2.2.1 Meaning of Probability Distribution 2.2.2 Normal Distribution
Explain the concept of covariance, variance and correlation. Discuss the basic rules of covariance and variance.
Unit III: Covariance, Variance and Correlation (10) 3.1 Sample Covariance 3.1.1 Meaning of Sample Covariance 3.1.2 Basic Rules of Sample Covariance 3.2 Population Covariance 3.3 Sample Variance 3.3.1 Meaning of Sample Variance 3.3.2 Basic Rules of Sample Variance (without proof) 3.4 Population Variance 3.5 Correlation in terms of Variance and Covariance
Analyze the simple linear model. Explain the concept and significance of stochastic error term. Use ordinary least squares method in regression analysis. Explain the assumptions underlying ordinary least squares method. Interpret linear regression equation. Explain the concept of goodness of fit. Unit IV: Simple Regression Analysis (12) 4.1 The Simple Linear Model 4.2 Stochastic Error Term 4.2.1 Concept of Stochastic Error 4.2.2 Significance of Stochastic Error term
4.3 The Ordinary Least Squares Method (OLS) 4.3.1 Basic Concept of OLS 4.3.2 Assumptions underlying OLS 4.4 Interpretation of a Linear Regression Equation 4.5 Goodness of Fit (R 2 )
Explain the concept of multiple regression analysis. Interpret multiple regression coefficients. Unit V: Multiple Regression Analysis (5) 5.1 Basic Concept of Multiple Regression Analysis 5.2 Interpretation of Multiple Regression Coefficients
Distinguish linear and non- linear relationships. Analyze the significance of non-linear relationship. Analyze log-linear regression model.
Unit VI: Transformations of Variables ; and Regression Analysis (5) 6.1 Difference between Linear and Non-linear Relationships 6.2 Significance of Non-linear Relationship 6.3 Regression Analysis of Log-linear Model Explain the concept of dummy variables. Analyze the need for dummy variables in economic analysis. Explain dummy variable trap. Unit VII: Dummy Variables (8) 7.1 Basic Concept of Dummy Variables 7.2 Need for Dummy Variables 7.3 Dummy Variable Trap
Note: The figures in the parentheses indicate the approximate periods for the respective units.
4. Instructional Techniques: Lecture and discussion Group work and individual work Self study Assignments Presentation by students Term paper writing Quizzes Guest lecture
5. Evaluation System:
Mathematical Methods for Economics External Evaluation Weight Marks Internal Evaluation Weight Marks End semester examination 100% 60 Assignments 10%
40 Quizzes 10% Attendance 10% Presentation 10% Term papers 10% Mid-Term exam 40% Group work 10% Total External 100% 60 Total Internal 100% 40 Full Marks: 60 + 40 = 100
6. End Semester Examination Model:
Full marks: 100, Pass marks: 45, Time: 3 Hrs
Nature of Question Total questions to be asked Total questions to be answered Total marks Weightage External exam marks Group A: Multiple choice 20 20 201 = 20 20% 12 Group B: Short answer type question 11 8 85 = 40 40% 24 Group C: Long answer type question/ case studies 6 4 410 = 40 40% 24 100 100% 60
7. Prescribed Books:
Text Book Gujarati, D.N. & Sangeetha. (2007). Basic Econometric, Fourth edition, New Delhi: The McGraw Hill Companies. Dougherty, C. (2011). Introduction to Econometrics. Fourth edition: Oxford University Press.
Reference Wooldbridge, J.M. (2013). Introductory Econometric: A Modern Approach, Fifth edition: South-western College Publications.