Homework 1: ECON 6113-01 Fall 2017

Due Date: Friday September 22nd, 2017 5:00PM

NO LATE ASSIGNMENTS WILL BE ACCEPTED
ALL ASSIGNMENTS MUST BE SUBMITTED VIA THE COURSE CANVAS SITE
In order for your assignment to be graded, you must
1. Type your response to each of the questions. For questions involving calculations or
derivations, show your work. TO AVOID COMPATIBILITY ISSUES, YOU MUST
SUBMIT YOUR RESPONSES AS A PDF FILE.
2. Submit any Stata code that you used to complete the assignment as a do file
3. Submit the Stata log file that displays the output from the code that you used to complete
the assignment
Chapter 2 Textbook Questions
Conceptual Questions
Question 3 (Make sure to show how you calculated the OLS estimates)
Question 6
Question 11
Computer Exercises
Question C5
Question C9
Simulation Exercises
Simulation Exercise 1: Use Stata to run 1000 iterations of the following experiment,
saving the parameter estimates at each iteration.
1. Set the number of observations equal to 100
2. Create a variable that contains 100 independent draws from the standard normal
distribution (~(0,1))
3. Create a variable X that contains 100 independent draws from the uniform
distribution over the unit interval ( ~(0,1))
4. Use local macros to set the value of the intercept (0 ) for the model equal to 0.5 and
the value of slope in the model (1 ) equal to 1.2.
5. Create a variable Y defined as
= 0 + 1 +
6. Use OLS to estimate the equation above to get estimates of the intercept and slope
parameters denoted 0 and 1 , respectively.
 After you have completed 1000 runs of the simulation, you should have 1000 different
values for each of your parameters. Calculate the mean and standard deviation of 0 and
1 and display the histograms of each of the estimates. Do the results of this experiment

suggest that OLS is unbiased in this case? Why or why not?
Simulation Exercise 2: Use Stata to run 1000 iterations of the following experiment,
saving the parameter estimates at each iteration.
1. Set the number of observations equal to 100
2. Create a variable that contains 100 independent draws from the standard
normal distribution (~(0,1))
3. Create a variable 0 that contains 100 independent draws from the uniform
distribution over the unit interval (0 ~(0,1))
4. Now create a variable defined as
= 0 + 0.9
5. Use local macros to set the value of the intercept (0 ) for the model equal to 0.5
and the value of slope in the model (1 ) equal to 1.2.
6. Create a variable Y defined as
= 0 + 1 +
7. Use OLS to estimate the equation above to get estimates of the intercept and slope
parameters denoted 0 and 1 , respectively.

After you have completed 1000 runs of the simulation, you should have 1000 different
values for each of your parameters. Calculate the mean and standard deviation of 0 and
1 and display the histograms of each of the estimates. Do the results of this experiment

suggest that OLS is unbiased in this case? Why or why not?
Chapter 3 Textbook Questions
Conceptual Questions
Question 5
Question 7
Question 16
Computer Exercises
Question C5
Question C6
Question C10 (Include the plots from part vi in your main document)