Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel [Hardcover]

Humberto Barreto (Author), Frank Howland (Author)

Book Description

Publication Date: December 26, 2005 | ISBN-10: 0521843197 | ISBN-13: 978-0521843195

This highly accessible and innovative text (and accompanying website: www.wabash.edu/econometrics) uses Excel (R) workbooks powered by Visual Basic macros to teach the core concepts of econometrics without advanced mathematics. It enables students to run monte Carlo simulations in which they repeatedly sample from artificial data sets in order to understand the data generating process and sampling distribution. Coverage includes omitted variables, binary response models, basic time series, and simultaneous equations. The authors teach students how to construct their own real-world data sets drawn from the internet, which they can analyze with Excel (R) or with other econometric software.

Editorial Reviews

Review

"Barreto and Howland have taken a truly innovative approach to teach undergraduate econometrics, using computer simulation methods to illustrate and clarify difficult topics. Fully integrated with Microsoft Excel, this textbook forces students to take a hands-on approach to the subject. There is no better way to learn econometrics than by doing econometrics!"
Jason Abrevaya, Purdue University

"Barreto and Howland have done an excellent job of producing an introductory econometric textbook based on Excel software combined with a well written and applied intuitive approach to econometrics. In my opinion, their teaching philosophy is absolutely the correct method: Put the student in front of a computer and teach econometrics by doing econometrics"
Daniel V. Gordon, University of Calgary

"Humberto and Barreto have written a worthwhile and unique textbook on introductory econometrics. I was initially skeptical that Excel and Monte Carlo simulation could be integrated coherently, but the authors execute it well. This book has many positives, including accessibility, potential to engage some students who otherwise might not be interested and likelihood of students finishing with a strong understanding of sampling distributions and linear regression...instructors should consider this progressive textbook for their undergraduate econometrics course."
Ryan E. Wiegand, Journal of the American Statistical Association

Book Description

This introductory econometrics book is radically different from its competitors. Where other texts are filled with formulas and jargon, packed with a great deal of advanced material and require advanced mathematics, its fundamental strategy is to use clear language and take advantage of recent developments in computers to create concrete, visual explanations of difficult, abstract ideas. For more, readers may visit the web site at www.wabash.edu/econometrics.

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Product Details

• Hardcover: 798 pages
• Publisher: Cambridge University Press (December 26, 2005)
• Language: English
• ISBN-10: 0521843197
• ISBN-13: 978-0521843195
• Product Dimensions: 10.2 x 7.1 x 1.5 inches
• Shipping Weight: 3.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.2 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #453,106 in Books (See Top 100 in Books)

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47 of 47 people found the following review helpful:

5.0 out of 5 stars Interactive Guide to UNDERSTANDING econometrics, February 15, 2006

By 

Richard Macha (Portland, OR USA) - See all my reviews
(REAL NAME)   

This review is from: Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel (Hardcover)

When I was a new graduate student I ended up buying several different econometrics texts. No one text had the best explanation for each topic. The problem remained that for many topics I never did find a book which translated the formal mathematical presentation into a practical worked out example, so that I could understand the procedure and how to implement it.

This book and accompanying CD-ROM does that and much more.

Every topic includes guided Microsoft Excel spreadsheets and add-ins which illustrate the topic being addressed. The text clearly explains not only the HOW, but the WHY. The economics and the econometrics are presented with such clarity and unity; bridging the two in a way that none of the other texts do.

In Barreto and Howlands book/CD package you interact with the data and the graphs (they include a superior add-in for creating histograms), and run Monte Carlo simulations to see the behavior of the estimators in repeated sampling. These are "live" spreadsheets that invite you to experiment. For example; there is an Excel workbook which illustrates the correlation coefficient. Rather than a dry recitation of formula and proof, you can interact with the spreadsheet and see exactly how the same coefficient can apply to data having very different patterns. It is one thing to see an illustration, and quite another to actually be the one creating the diagram, simply by running the macros and changing parameters. This "hands on" approach is so vital to actually getting an understanding of the material. I have only a basic understanding of Excel, and have had no difficulties in using the workbooks.

While the limits of Excel are pointed out by the authors, it is important to note the reason for using Excel. It is widely understood and available; there is no learning curve. By using Excel there is no software barrier between the student and understanding the principles of econometric modelling. In less than 1/2 hour I took the data and example of a Probit model using Maximum Likelihood estimation from a course web site from across the country and replicated the results using the add-in provided. Most of that time was used to extract the data from a .pdf file and get it formatted properly for Excel. Once I had the data in Excel, it took less than 2 minutes to run the Probit estimation (my first time using that add-in!) By the way, the results using the authors add-in for solving Probit models with ML estimation were the same as the results from GAUSS code to do the same. The add-in had a distinct advantage though in that a choice for Probit or Logit model estimation using either Non Linear Least Squares or the Maximum Likelihood estimation was just a radio button away! This text can complement any course, regardless of the software used.

Again, the beauty of the book is that you are not just left with Greek formulas that leave you wondering how to do the computations, and you are not left with computer output leaving you to wonder how to interpret that output. The text explains the meaning so powerfully that you are not only armed with an understanding which is useful for success in your course work, but also for applying the quantitative tools in real world analysis and applications. The text is like going to see your favorite professor who is sitting there with you one on one, giving you insight which only comes from experience.

I've been through courses that use Greene, and Judge, as well as introductory texts. This text stands alone in making use of the computing power we have at our disposal today, not to produce more computer printouts, but rather to increase our understanding--providing the sound reasoning for applying that power.

I should add that even after two years of statistics and econometrics I learned quite a lot from the statistics review chapters. Don't be misled by the "Introductory" title. I had learned and executed Artificial Neural Network models in graduate courses, but still learned a lot from the section on correlation in this book. For undergrad students this book will put you on the right path. For grad students it will correct blind spots and misconceptions.

I highly recommend this book/CD package to any econometrics student and to practicing analysts that use regression analysis. The authors have created a product that I wish I had when I was in school, but am glad I found now for applying in my career.

Detailed info on contents as well as the Excel files and add-ins are available from the authors' web site which I found prior to ordering from Amazon. Once I tried the workbooks, I knew I wanted the book. It's 800 pages of solid information and inspired teaching.

http://www.wabash.edu/econometrics/index.htm

28 of 28 people found the following review helpful:

5.0 out of 5 stars Blows Away All Other Intro Texts, May 30, 2006

By 

Stephen J. Zierak - See all my reviews
(REAL NAME)   

This review is from: Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel (Hardcover)

I am only half finished with this book, but since there is only one other review, I want to get my thoughts up NOW. I may add to them when I have finished.

My wife is an econ major at a small school with very few econ majors. Econometrics is not offered as a course. Although as a practical businessman with a preference for Austrian school economic theory I have a healthy scepticism about quantitative macroeconomic (especially) formulas, I have told my wife that she can not be a part of today's theoretical discussions without a basic understanding of econometrics. I promised to help her self-study this topic, and have reviewed a number of supposedly "introductory" texts (to remain nameless, but they are standards)that have lost me within 50 pages. Neither my wife nor I have calculus or matrix algebra. However, even those texts that say they do not rely on such math knowledge are still confusing. Until now.

Barreto's text is a wonder. The other review gives solid examples of why this is. Let me just say that you will be able to see econometric principles in action. The explanations are incredibly clear, and the work on the beefed up excel spreadsheets effectively demonstrates those explanations. I know this will be difficult to believe, but the text is actually fun to read. My wife and I both have college algebra, business statistics, and basic excel. That's all you need to use this book.

Every university should adopt this book as the intro econometrics text. It provides an approach to learning the topic that is accessible to any intelligent econ student. Those going on to PhD work could supplement with calculus, matrix algebra, and one of the other so-called intro texts. Barreto provides a way for normal econ students to understand econometrics, something that all econ students should be required to do. (Even though much of econometrics is nonsense, knowledge of its applications and mis-applications is still the ticket to being taken seriously in economic debate.)

I only wish I could give this book more than 5 stars. It is a stunning achievement.

7 of 8 people found the following review helpful:

5.0 out of 5 stars Excellent book for practitioners, March 10, 2008

By 

Mr. Mariusz Siomak (London, UK) - See all my reviews
(REAL NAME)   

This review is from: Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel (Hardcover)

Excellent book for everybody who would like to understand statistics and econometrics. It concentrates on regression and Monte Carlo simulation. I see the biggest value of the book in the way the statistical concepts are introduced. The authors build the intuition of the reader using meaningful examples, explaining thoroughly all the concepts and using Monte Carlo simulations to visualize them. Simulations are used as a tool for estimating parameters, but also support the reader's intuition and visualize the stochastic variables, their distributions, the role of chance in statistical inference, hypothesis testing etc. The examples in the book are not just illustration of the text, they are meant to open reader's eyes to some unexpected / counterintuitive features, that are difficult to capture just by studying the theory.