ECON 318: Introduction to Econometrics

University of Southern California

Spring 2016
Faculty: Ali Shahnawaz
Office: KAP 306E
e-mail: shahnawa [at] usc.edu
Office Hours: TuTh 2:00 3:30 pm

TA: Weining Xin, e-mail: weiningx [at] usc.edu

TA Office Location: KAP 363
TA Office Hours: TuTh 2-3:30pm
Class Location & Schedule: GFS 116, 4-5:50pm

COURSE OBJECTIVES AND DESCRIPTION: This course is designed to introduce students

to econometrics: the field of economics which develops the methods by which statistical tools are
employed in empirical research. We will focus on estimation and inference in the context of the
most widely used methodology, linear regression analysis of a single equation. Students
completing the course will gain an understanding of the analytical foundations of econometric
analysis and will be prepared to start doing independent research using economic data.
PREREQUISITES: ECON 317, which itself has MATH 118 or 125 as a prerequisite.
REQUIREMENTS: Students will be expected to prepare assigned readings before class.
Problem sets, listed at the end of this syllabus, are an important component of the course and will
be critical in enhancing your understanding of the material (not to mention, in helping you do
well on the exams!). No late assignments will be accepted since I will provide solutions soon
after the homework is due and it wont make much sense to accept assignments once the solutions
are out. I will post answers to the Blackboard website for this course.
In addition, there will be two midterms and a final exam. All will be closed-book and will cover
assigned readings from the text and assigned articles, as well as the lectures. There are no makeups or early exams! The exams will be held on the following dates:
Exam 1: Thursday, March 10

Exam 2: Tuesday, April 26

FINAL EXAM: Thursday, May 5, 4:30-6:30 pm

(Please double check this info with the finals schedule online)
Do not miss the exams!
-

Problem sets are worth 25%

Midterms are each worth 25%
The final exam is worth 25% (Missing the final is an automatic F on the course!).

TEXT: The required book is J. Wooldridge, Introduction to Econometrics: A Modern Approach,

6th edition, Southwestern Cengage Learning. Since much of the homework will be assigned from
the textbook, it is important that you have access to the 6th edition. A recommended text for the
course is J. Angrist and J-S. Pischke, Mastering Metrics: The Path from Cause to Effect
(Princeton University Press), which provides a friendly introduction to some modern techniques.
The last book is not required.
SOFTWARE: You may use any software to do your homework. Widely used are STATA, SAS,
MINITAB, EXCEL, and R. The last one has a steep learning curve but can be downloaded for

free from https://www.r-project.org/. Many software packages are available on USC

computers and network. You can find a lot of help online for working with these packages.
STATA is popular in economics. Help with getting started with STATA is available online at:
(1) http://www.ats.ucla.edu/stat/stata/
(2) https://sites.google.com/site/econometricsacademy/econometrics-software/stata
STUDENTS WITH DISABILITIES: Students requesting academic accommodations based on
a disability are required to register with Disability Services and Programs (DSP) each semester. A
letter of verification for approved accommodations can be obtained from DSP when adequate
documentation is filed. Please be sure the letter is delivered to me as early in the semester as
possible. DSP is open Monday Friday, 8:30 5:00. The office is in Student Union 301 and their
phone number is (213) 740-0776.
TENTATIVE SCHEDULE
The schedule below is tentative and may be adjusted as we progress through the semester. Note
that the recommended journal articles can be downloaded from JSTOR (www.jstor.org) as long
as you access the website while on the USC network. Wooldridge is referred to as W and
Angrist and Pischke is denoted by AP below.
Week 1: Basic Math and Probability
Reading: W, Appendix A and B
Week 2: Statistics
Reading: W, Appendix C
Week 3: Simple Linear Regression
Reading: W, Ch. 1 and 2
Recommended: (1) AP, Introduction, Ch. 1; (2) DiNardo, John. Interesting Questions in
Freakonomics. Journal of Economic Literature 45(4): December 2007, pp. 973-1000.
Week 4: Multiple Regression: Estimation
Reading: W, Ch. 3
Recommended: AP, Ch. 2
Week 5: More on Estimation and Multiple Regression: Inference
Reading: W, Ch. 3 and 4
Recommended: AP, Ch. 2
Weeks 6-7: More on Inference and Multiple Regression: Asymptotics and Other Issues
Reading: W, Ch. 4, 5, and 6
Week 8: Dummy Variables
Reading: W, Ch. 7
Week 9: EXAM 1
Week 10: Heteroskedasticity
Reading: W, Ch. 8 and 9

Recommended: Hoynes, Hilary et al. What Mean Impacts Miss: Distributional Effects of
Welfare Reform Experiments. American Economic Review 94(6): September 2006, pp. 9881012.
Week 11: Time Series
Reading: W, Ch. 10
Week 12: Serial Correlation and Other Issues
Reading: W, Ch. 12
Week 13: Panel Data and Difference-in-Difference
Reading: W, Ch. 13
Recommended: (1) AP, Ch. 5; (2) Revisit W, Ch. 4; (3) Card, David The Impact of the Mariel
Boatlift on the Miami Labor Market Industrial and Labor Relations Review 43(2): January 1990,
pp. 245-257.
Week 14: Instrumental Variables and 2SLS
Readings: W, Ch. 15
Recommended: (1) AP, Ch. 3; (2) Angrist, Joshua D. and Alan B. Krueger. Instrumental
variables and the search for identification: From supply and demand to natural experiments. The
Journal of Economic Perspectives 15(4): Fall 2001, pp. 69-83.
Week 15: EXAM 2
ASSIGNMENTS: These need to be turned in at the start of the lecture on the due date. Note that
the problem numbers preceded by a C are computer exercises. Advice: Please give yourself
ample time to work on the problem sets. Even though these are not due every week, many
assignments are long and require regular and consistent work to complete (and learn from!).
Problem Set
HW1: 16 problems
Appendix A: #6, 7, 9;
Appendix B: #2, 5, 10;
Appendix C: #1, 3, 6, 9;
Ch. 1: #1, C1, C3;
Ch. 2: #5, 6, C6
HW2: 9 problems
Ch. 3: #3, 9, C4, C6;
Ch. 4: #1, 3, 5, C3, C9
HW3: 6 problems
Ch. 5: #3, C2;
Ch. 6: #3, 8, C2, C13
HW4: 9 problems
Ch. 7: #1, C6, C7;
Ch. 8: #2, 4, C3, C4;
Ch. 9: #3, C3
HW5: 10 problems
Ch. 10: #2, 6, C7, C9;
Ch. 12: #1, 3, C2, C10;
Ch. 13: #1, 3

Due Date
Tuesday, Feb 2

Thursday, Feb 18
Tuesday, Mar 1

Tuesday, Mar 29

Tuesday, April 19