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ECN 425 - Introduction to Econometrics

Spring 2022

Course Objectives

The objective of this course is to help students develop a working knowledge of basic econometric theory and methods. Topics will include regression analysis, hypothesis test- ing, prediction, and heteroskedasticity. The use of econometric results in the assessment of economic theory will be emphasized.


1.  One semester of intermediate micro theory (ECN 214 or ECN 312/314) with a grade of C or greater.

2.   One semester of statistics (ECN 221, ECN 231, or STP 226 with a grade of C or greater).

Course Format and Class Meetings

Lecture videos are posted on Canvas.  You are expected to watch the videos and take a quiz before class.  Class meetings will feature additional lectures, Q&A, examples, and group problem solving.


Your final course grade will be based on quizzes (15%), problem sets (25%), three midterm exams (40%), and a final project (20%). The following grading scheme will be used as the default: 98-100=A+, 93-97=A, 90-92=A-, 87-89 = B+, 83-86 = B, 80-82 = B-, 75-79 = C+, 65-74 = C, 55-64 = D. I reserve the right to lower the cutoffs, but will not increase them.  Students may choose to be graded on the Y basis if they prefer.  A grade of Y is equivalent to a grade of “C or higher.” Any student who would like to be graded on this basis must notify me before 11:59pm on April 28.


Quizzes will be posted on Canvas.  They are due by 7:30am on the day of lecture.  Late submissions will not be accepted. All work must be done independently.

Homework/Problem Sets

There will be multiple problem sets using Mindtap. You may form study groups to work on problem sets together. However, each student must submit their own answers.

Late submissions will be accepted for up to 7 days, with an automatic 25% reduction in your score.

Your score on each question of a problem set will be calculated using Mindtap’s “Do No Harm” mode.  This means that your first attempt will be your base score.  If you choose to make a second or third attempt on (different versions of) that question, your answer(s) will be averaged with your base score only if they are higher. Thus, attempting a different version of a question can improve your score but not lower it. When you are finished with your assignment, submit it by clicking “I’m Done, Grade Assignment Now.” Do not click this button if you still want to try different versions of questions.


Students who cannot be present for one of the exams must notify me in advance, if possible, and document the reason for their absence. For those with a legitimate excuse, the other exam scores will be substituted for the missed exam.  Otherwise a zero will be recorded for the missed exam.

Final Project1

For the final project, students may work individually or in a group. If you form a group, all students must contribute to all components of the project.  The final project will be due at 11:59pm on Tuesday, May 3.

Re-grade policy

Requests for re-grades will considered, subject to a few rules.  In the case of a clerical error (i.e., the numbers do not add up), please email me with a quick note. In cases where you feel that you should have been credited more points, please email a single paragraph explaining why you think that your answer was worth more points that it received. Note that re-grades are final, re-grades must be requested promptly, and work submitted for re-grade is subject to re-grade of the entire exam or assignment (i.e., it is therefore possible that your overall grade can go down following a re-grade).

Stata Software

Throughout the course, we will use the software program STATA to conduct econometric analysis.  You will need to use STATA to complete the problem sets.  In addition, exam problems may require you to interpret STATA output. The bast way to access STATA is to install it on your personal machine using the W.P. Carey School of Business site license. Instructions may be found on the course Canvas site.  You can also access STATA on University computers. Alternatively, you can purchase a license.2 If you have trouble with the ASU-provided options, please contact WP Carey Technical Support at 480-965-2400, [email protected].

Mindtap Software and Textbook

The required textbook for the course is: Mindtap for Introductory Econometrics by Jeffrey M. Wooldridge.  MindTap will be integrated into Canvas and made available to you at a special discounted rate of $92 plus tax.3 The charge for the book will appear on your student account as BKSTR PUBLISHER NEGOTIATE RATE after drop/add. MindTap is required and that the e-book is included with the Mindtap subscription, but if you’d like to purchase a discounted loose-leaf $44.50 print copy to accompany MindTap, you

can do so through the Bookstore website (http://bookstore.asu.edu) by searching for

this ISBN: 9780357309209.  For Mindtap tech support, or you may call 1-800-354-9706 or go to the following page: https://www.cengage.com/student-training/mindtap/ canvas/ia-yes.


The Canvas system will be used to distribute course materials. Please ensure that you are able to access our course on Canvas.


I go on the expectation and assumption that all students are adhering to the W.P. Carey and A.S.U. Honor Codes. I expect that students do not distribute (for profit or otherwise) material from this course. Please put devices on silent mode to avoid distractions.


In case you cannot attend class in person as a result of illness or possible exposure to infectious disease, you may participate in this class remotely via Zoom.  To participate remotely, please email me in advance to receive further instruction.  Please do not come to class if you are feeling unwell.

ASU Academic Calendar

The ASU Academic Calendar, which contains information, such as the Drop/Add Dead- line, the Course Withdrawal Deadline, and the Complete Withdrawal Deadline, can be found at https://students.asu.edu/academic-calendar

Course Outline

I            Introduction

i       What is Econometrics?                                                    W Chapter 1

II           Analysis with Cross-Sectional Data

i       The Simple Regression Model                                          W Chapter 2 ii      Multiple Regression Model – Estimation                         W Chapter 3 iii     Multiple Regression Model – Inference                            W Chapter 4 iv     Multiple Regression Model – Asymptotics                      W Chapter 5 v      Multiple Regression Model – Model Specification           W Chapter 6 vi     Multiple Regression Model – Dummy Variables              W Chapter 7 vii    Heteroskedasticity                                                            W Chapter 8 viii   Specification Problems                                                     W Chapter 9

III         Instrumental Variables, Panel Data, and Discrete Choice                              i       Instrumental Variables                                                     W Chapter 15 ii      Properties of OLS Estimator (Time-Series)                    W Chapter 10 iii     Properties of OLS Estimator (Panel)                              W Chapter 13 iv     Selected Estimation Issues (Panel)                                  W Chapter 14 v      Limited Dependent Variable Models                               W Chapter 17

W.P. Carey School of Business Learning Goals

The Undergraduate Program of the W.P. Carey School of Business has established the following learning goals for its graduates:

1. Critical Thinking

2. Communication

3. Discipline Specific Knowledge

4. Ethical Awareness and Reasoning

5. Global Awareness

Items in bold have significant coverage in this course.

Economics Department Detailed Criteria for Learning Goals

The economics department has established the following criteria for the first three under- graduate learning goals:

Critical Thinking

Identies a question (or problem) and gathers relevant information to analyze it.

Draws inferences that are supported by the data/evidence and the analysis.

Synthesizes analysis and theory to draw conclusions or make recom-



Constructs a logical argument based on economic principles and ob- served evidence.

Eectively communicates in oral form.

Eectively communicates in written form.