Quantitative Methods 1: Mathematical Economics and Statistics

Session 1: Stochastic Quantitative Methods

Course SA 310.770
Mark R. White
Location: Rome 200, 1:00 3:30 pm, July 15 August 4, 2014
Syllabus Version: July 7, 2014

Course Description
This course is a graduate-level review course in stochastic quantitative methods and linear
algebra techniques. These methods form the basis for econometric analysis, probabilistic
analysis, and Monte Carlo simulation. Since all MIEF students should have encountered
most of these concepts in earlier coursework, the emphasis will be on reviewing, refreshing,
and deepening the basic knowledge in these areas.
The course will address the following topics: probability concepts and mathematics,
probability distributions, statistical concepts and techniques, simulation sampling, linear
algebra concepts and techniques, the concepts behind ANOVA and regression analysis, and
STATA statistical programming techniques. The course is designed to reinforce and expand
the foundation knowledge necessary for the MIEF program.

Course Grading
There are no examinations for this course. Three take home assignments will be provided
to evaluate the students understanding of the course concepts.

Blackboard
This course will use the Blackboard class management system for most course
communications, including posting of class materials.

Course Materials
The materials for this course consist of one required text, one optional text, and
supplemental lecture notes, handouts, and readings.

Required Text:

Fundamental Methods of Mathematical Economics, 4th Ed. Alpha C. Chiang, Kevin

Wainwright. McGraw-Hill/Irwin, 2005.

Optional Text: If you already possess a college level introductory statistics textbook, you
may use that as a resource for this course. It should cover all of the topics listed under
Probability and Statistics in the Course Outline section below. The following optional text is
an inexpensive and concise supplement to a lengthier statistics text and will serve as the
structural basis of the course. If you do not have access to a statistics textbook, you should
treat this as a required text.

Schaums Outlines: Probability and Statistics, 4th Ed. Murray Spiegel, John Schiller,

R. Alu Srinivasan (1). McGraw-Hill, 2013.

(1) Please note that there are several similarly titled Schaums Outlines, so make sure that
you obtain the book by these specific authors.

Contact Information
During the period from July 14 through August 4, my office hours in BOB 719 will be on
Mondays, Tuesdays, and Thursdays 11:30 12:45, or by appointment. I expect to be
available most Wednesdays as well. My email addresses is mwhite63@jhu.edu. I expect to
check email daily and will be as timely as possible in responding. I can be reached by
telephone at 301-906-1669 (C).
Class Information
The class is scheduled for 2.5 hours from 1:00 pm to 3:30 pm. I will provide one short
break during the class. Since the class is structured as a review class, I expect to move
fairly quickly through the material. Please review the class notes before the class, so that
you can come prepared with questions in areas of less familiarity. I will be available to
continue answering questions after class for anyone who wants to discuss the topics further.

STATA Tutorials
STATA is used in the econometrics courses at SAIS. Weekly STATA tutorials will be
provided during the course to familiarize students with basic statistical analyses using the
STATA application. Students are not required to install STATA on their own computers. It
is available to students as a SAIS cloud application and on the computers in the Economics
computer lab.
The three STATA tutorials will take place in the Economics computer lab (BOB 750) on three
Monday afternoons: July 21, July 28 and August 4. Since the lab is relatively small, the
class will be split into two sections to avoid overcrowding. The first section will meet 1:30
to 3:00 pm; the second section will meet 3:00 to 4:30 pm.

Course Outline:
Readings for each lecture are provided below. You are encouraged to review the readings prior to
the class. The references Probability and Statistics and Mathematical Economics are to the two
texts listed above.
In addition, my class notes will be posted prior to each class, so review them before the class as well.
You may print them ahead of time if you want to take your own notes directly on my class notes.
Class

Date

Lecture Topics

Readings

Assignments

P robability, Random
Variables, and
M athem atical Ex pectation

7/15
Tuesday

Probability rules, key concepts,

discrete and continuous
probability distributions,
random variable definition,
development and
interpretation of mathematical
expectations.

P robability and Statistics:

Chapter 1 (pp. 3-10),

Chapter 2 (pp. 34-44),
Chapter 3 (pp. 75-85).

Assignment packs 1, 2, 3
distributed.

Basic Distributions and

Sam pling Theory
2

7/17
Thursday

7/21
Monday

7/22
Tuesday

Binomial, normal, Students t,

and chi-square distributions,
sampling distributions of
means, variances, differences
and sums.

P robability and Statistics:

Chapter 4 (binomial and

normal only, pp. 108-111),
Chapter 5 (pp. 153-162).

STATA Tutorial
Estim ation Theory and
Hypothesis Testing
Point estimates, confidence
intervals, maximum likelihood
estimates, hypothesis testing.

P robability and Statistics:

Chapter 6 (pp. 195-199),

Chapter 7 (pp. 213-222).

Assignment Pack 1

due
(probability and
sampling theory,
basic distributions)

Class

Date

Lecture Topics

Readings

Assignments

Advanced P robability
Distributions and
Sim ulation Sam pling
4

7/24
Thursday

7/28
Monday

Characteristics of additional
distributions, relationships
between distributions,
bivariate distributions, use of
inverse distribution functions
in simulation sampling.

P robability and Statistics:

Chapter 4 (pp.108-118).

STATA Tutorial
Linear Algebra

7/29
Tuesday

The basic mathematics of

linear algebra will be
introduced: matrices, vectors,
matrix operations, geometric
interpretation, properties,
transposes, inverses, linear
equations, singularity, rank,
determinants.

Assignment Pack 2
M athem atical Econom ics:

Chapter 4 (sections 4.1-4.6),

Chapter 5 (sections 5.1-5.4)

due
(estimation,
hypothesis tests,
advanced
distributions)

I ntroduction to ANOVA and

Regression Concepts

7/31
Thursday

8/4
Monday

In preparation for
econometrics, this class will
discuss the sampling
distribution ideas underlying F
tests, and present an
introductory visual approach to
understanding analysis of
variance (categorical variables)
and regression analysis
(quantitative variables).

No readings.

Assignment Pack 3

STATA Tutorial

due
(linear algebra)