345_syll - University of Victoria


Fall 2015

University of Victoria


Applied Econometrics

CRN: 11008

Prof: Martin Farnham

BEC 354 mfarnham@uvic.ca

Office Hours M: 11:30-1:00

Th: 1:00-2:30


Lectures are held Mon/Thurs from 10:00-11:30am in David Turpin A110


This course provides a general introduction to the practice of econometric analysis.

While motivated by intuition, the presentation of estimators and tests will be primarily mathematical in nature. We will focus largely on multiple regression techniques in crosssectional data analysis, considering common issues and problems that arise in applied empirical social science research. Students will use EViews—an econometrics software package—to analyze data, draw inference, and compare alternative modeling approaches.

Throughout the course, common pitfalls of empirical research will be highlighted.


Evaluation in this course will consist of two in-class midterm exams, a lab exam, a series of iClicker questions throughout the term, and a comprehensive final exam. Exams will be held according to the schedule listed below. The determination of your final grade for the course will be based on the two midterm tests, a lab exam, and the final exam.


Midterm #1: Thursday October 8 (In class)

Midterm #2: Thursday November 5 (In class)

Lab exam: In your designated lab session, week of November 23

Final Exam: Scheduled by the Registrar

Note: Students are advised not to make travel plans until after the examination timetable has been finalized. Students who wish to finalize their travel plans at an earlier date should book travel that departs after the end of the examination period (see the

University Calendar). There will be no special accommodation if travel plans conflict

with the examination.


There are two basic evaluation options in this course. One allows students to earn credit from course attendance and by correctly answering iClicker questions during the lectures; the other allows students to miss lectures and place more weight on the midterms.

Evaluation Option 1

Midterm #1 20%

Midterm #2 25% iClicker score 0%

Lab Exam 15%

Final Exam 40%

Evaluation Option 2

Midterm #1 15%

Midterm #2 20% iClicker score 10%

Lab Exam 15%

Final Exam 40%

Students must have a passing average (i.e., 50% or higher) on their exams (midterms, final, and lab exam) in order to pass the course. In other words, iClickers can boost your grade in the course, but you must demonstrate a basic knowledge of the material to receive a passing grade.

You do not need to tell me whether you’d rather have Option 1 or Option 2 apply. At the end of term I will automatically select whichever option gives you a higher grade.


This term I am experimenting with iClickers as a way of testing your understanding in lecture and getting more immediate feedback about what you understand and don’t understand. You must bring your own iClicker to class to receive iClicker points.

Sending your iClicker with another student constitutes academic dishonesty and will be penalized accordingly (both the student sending their iClicker and the student they send the iClicker with). Points will be given for correct answers to iClicker questions, as well as for simply showing up. Realize that each iClicker question asked (and even each lecture) counts for very little of your overall iClicker score. So don’t pester me about allowing you to makeup iClicker points if you’re sick, late to lecture, or leave your iClicker at home. iClickers will not be used for scoring until the week of September 15. But you should begin bringing your iClicker to class so you get in the habit of doing so and learn how to use it.

You are not required to bring iClickers to labs. Just to lecture.


A series of problem sets will be distributed throughout the course. While these will not be graded, you are encouraged to work through the problem sets to gauge your understanding of the material. Most students will find that careful practice solving problems significantly increases their performance on exams. Students are encouraged to work on these problems in groups after first attempting them individually.

The Department of Economics uses the following letter grades and numerical equivalents:

A+ A A- B+ B B- C+ C D F




















Note: E grades will not be assigned in this course. A mark below 50% will result in an F.

There are no exceptions to this grading scale.



The website will provide information about assignments. These will include textbook readings, additional readings that may be assigned, and problem sets.


The required textbook for this course is “Introductory Econometrics: A

Modern Approach,” (Fifth Edition) by Wooldridge.


Policies of the Department of Economics are summarized at http://www.uvic.ca/socialsciences/economics/undergraduate/home/course%20policies/in dex.php

. You are expected to read these policies. I summarize some key policies

(some of which are my own) below:

Attendance: Attendance is strongly recommended though not technically required.

I will not take attendance after the first two lectures, however, exams will cover material from lectures whether or not it is included in posted lecture notes. I reserve the right to deviate significantly from posted lecture notes when giving lecture.

Students who miss a lecture are responsible for finding out from a classmate what they missed, including all announcements made in lecture. Serious students will attend all lectures. Please do not ask me what you missed in lecture, if you happen to miss. Ask someone who was in attendance.

Respect for classmates/me: Please do not sleep or talk during lecture. Both are distracting to me and to your classmates…especially talking. You may think you’re whispering, but it doesn’t come across that way to everyone else.

Exam Makeups: If makeā€up tests are given, they will likely be on Friday afternoons.

So if you miss an exam, plan to keep the two following Fridays free for your makeup.

If you miss an exam due to illness, you must provide a verifiable doctor’s note (or note from Health Services) with the doctor’s phone number that details the reason you missed the exam, and testifies that you were too ill to take it. Note that you are responsible for checking your email (or having a family member or friend check your email) for announcements about exam makeups.

Electronic devices: During exams, only non-programmable calculators are permitted. All other electronic devices must be turned off and stored out of view.

Failing grades: I respect your choice to exert minimal effort in this class due to priorities elsewhere in your life. However, department policy sets the bar to pass a course very low, and I have no sympathy for those who fail to clear that bar.

Optimize carefully, should you choose to engage in risky cost-minimizing behavior!

Students regularly fail my courses. This is not meant as a threat, but as a warning that careless coasting can lead to disaster.

Webpage: Announcements, assignments and answers to assignments will be made available through the course web page at http://web.uvic.ca/~mfarnham/345.html


It is expected that students will check the web page frequently for updates and information relevant to the course.

Academic Integrity: Academic integrity requires commitment to the values of honesty, trust, fairness, respect, and responsibility. Students are expected to observe the same standards of scholarly integrity as their academic and professional counterparts. A student who is found to have engaged in unethical academic behaviour, including the practices described in the Policy on Academic Integrity in the University Calendar, is subject to penalty by the University. I respect students who are honest, regardless of their performance in the course, and to protect them from unscrupulous classmates I will ruthlessly prosecute anyone I catch plagiarizing or cheating in any other way. Period. If you have any question about what constitutes cheating or plagiarism, I’m very happy to explain this. Check with me before taking a chance.

Policy on Inclusivity and Diversity: “The University of Victoria is committed to promoting, providing and protecting a positive, supportive and safe learning and working environment for all its members.” This is important. Show respect for your classmates.

Policy on email: A good rule of thumb for emails is, “Only send it if it’s really important.” For example, if I post an answer key with an error on it 2 days before an exam (or promised you an answer key by a certain date and forgot to post it), email me. Email is arguably too cheap relative to what would be socially optimal. People send emails without thinking because it’s cheap (to them) to do so. Unfortunately,

emails impose a cost on the recipient who has to read them and respond to them. It becomes very tempting to send me an email asking “What will be covered on the midterm?” even though that very point will with 100% certainty be covered in lecture. So, I only respond to emails that really “needed” to be sent, and I get to decide what’s “needed.” Basically, if you could have figured out the answer to your question by 1) reading the syllabus; 2) reading the website; or 3) attending lecture, I won’t answer it. So check those sources, and if you missed lecture, ask a classmate who was there. If it’s a question on material (and hence was covered in lecture) you’re more than welcome to ask it, but come to office hours to do so or chat to me after lecture. Email is terrible for explaining most economics (and statistics).

If you need to email me, be sure to put “Econ 345” in the subject header.

Policy on Gifts: Some students have very kindly given me gifts in the past. While I truly appreciate the gesture, I would like to discourage this. I never want a student to get the impression that they need to curry favor with me in order to get a good grade. In fact, a gift would never affect a student’s grade, but it’s best to avoid any appearance to the contrary. So please don’t give me gifts. In any case, the kindest gesture of thanks you can ever make is to drop by sometime after grades are in and tell me you appreciated the course. That never fails to make my day.


The following is a rough schedule of the course. We may deviate from this schedule.

Date Topic Reading

Introduction (note: The course starts fast. I assume you know the review material well enough to move quickly through it. Make sure you keep up, or the rest of the course will be very hard to follow)

Sept 10 Overview, Review of Statistics

Sept 14 Review of Statistics, continued

Sept 17

Sept 21

Review of Statistics, continued

Introduction to Econometrics

Sept 24 Univariate linear regression

Multiple Regression Analysis

Sept 28 Estimation

Wooldridge Appendices A-B

Wooldridge Appendix B

Wooldridge Appendix C

Wooldridge Chapter 1

Wooldridge Chapter 2

Wooldridge Chapter 3

Oct 1

Oct 5

Oct 8

Oct 12

Oct 15

Oct 19

Oct 22

Oct 26

Oct 29



MIDTERM 1 (20% of Course Grade)

Closed Book/Closed Notes; In Class

Thanksgiving (no class)




Further Issues in Multivariate Regression

Further Issues in Multivariate Regression

Dummy Variables

Wooldridge Chapter 3

Wooldridge Chapter 4

Wooldridge Chapter 4

Wooldridge Chapter 5

Wooldridge Chapter 5

Wooldridge Chapter 6

Wooldridge Chapter 6

Wooldridge Chapter 7

Nov 2

Nov 5

Nov 9

Nov 12

Dummy Variables

MIDTERM 2 (25% of Course Grade)

Closed Book/Closed Notes; In Class

Reading Break

Dummy Variables

Wooldridge Chapter 7

Wooldridge Chapter 7

Nov 16

Nov 19


Introduction to time series analysis

Wooldridge Chapter 8

Wooldridge Chapter 10

Causality versus Correlation—or How to Be a Better Consumer of Statistics

Note: Lab Exams in Lab Sections Week of November 23

Nov 23

Nov 26

Determining causality under less-than-ideal conditions; some examples of bad research

Determining causality under less-than-ideal conditions; some examples of bad research

(TBA: On Website)

(TBA: On Website)

Nov 30

Dec 3

Determining causality under less-than-ideal conditions; some clever tricks

Determining causality under less-than-ideal (TBA: On Website) conditions; some clever tricks

(TBA: On Website)

Note: There will be a lab exam (during your assigned lab session) in the week of

November 23. The exam is worth 15% of your course grade. There is also a final exam worth 40% of your course grade.