Course Title: Basic Theory In Econometrics

Course Code: ECON704

Credit Units: 3
Course Level: PG

P/S

SW/F
W

TOTAL
CREDIT
UNITS
3

Course Objectives: This course presents the basic econometrics techniques emphasizing numerical estimation of economic relationships as applied to practical
economic and managerial problems.
Pre-requisites: NIL
Course Contents/Syllabus:
Module I Nature and Scope of Econometrics and Classical Linear Regression Model

Weightage (%)

Descriptors/Topics :

25

Descriptive Aspects: The simple linear model, Least square regression, Least squares regression with one explanatory
variable, Two decompositions of the dependent variables, Interpretation of a regression equation, Goodness of fit: R2
Module II Hypothesis Testing

25

Descriptors/Topics :

Properties of Least Squares estimates; Tests of hypotheses and confidence intervals, Forecasting
Module III Classical Multiple Linear Regression Model:
Descriptors/Topics :

i) A model with two explanatory variables

ii) Derivation and interpretation of the multiple regression coefficients
iii) Properties of the multiple regression coefficients

25

iv) Goodness of fit: R2

v) Dummy variable - distributed lags - need, limitation and interpretation in Economics
Module IV Violations Of Classical Assumptions and Remedies:

25

Descriptors/Topics :

i) Multicollinearity
ii) Heteroscedasticity
iii) Autocorrelation
Student Learning Outcomes:
On successful completion of the course, students will be able to:
Describe and apply the basic econometric techniques in decision making, understand the difficulties involved in the estimation process, evaluate and
interpret parameters.
State and explain the Classical Li2near Regression Model: two variable case assumptions, prove the Gauss - Marcov Theorem using Ordinary Least
Square method, use and interpret r as a measure of goodness of fit ,discuss the decomposition of dependent variables, conduct test of hypothesis and
confidence intervals for parameters.
Outline the Classical Multiple Linear Regression Model , explain and interpret Dichotomous Dummy variable models and distributed lag models.
Explain the violations of the assumptions of Classical Linear Regression Model :Multicollinearity, Heteroscedasticity and Autocorrelation and discuss
the remedial measures.
Pedagogy for Course Delivery:
The class will be taught using theory and problem solving method. In addition to assigning the problems, the course instructor will spend considerable time in
explaining the use ,interpretation and application in economics. Computer software techniques for data analysis will be used.
Assessment/ Examination Scheme:
Theory Assessment (L&T):
Continuous Assessment/Internal Assessment
Components (Drop down)
Weightage (%)

End Term Examination

Mid-Term Exam

Class Test

Assignment

Attendance

15

70

Text:
A.Koutsoyiannis, "The theory of Econometrics: An introduction exposition of econometric
methods", Educational low-priced books scheme, McMillan Education (1992)
Damodar N. Gujarathi,"Basic Econometrics", Tata McGraw Hill Ltd., 1999 (4th ed.)
J.Johnson,"Econometric Methods"
Christopher Dougherty,"Introduction to Econometrics", Oxford University Press (3rd edition)

References:
A.S.Goldberger (1998), Introductory Econometrics, Harvard University Press, Cambridge
Suresh K.Ghosh, "Econometrics", Prentice Hall of India Private Limited, New Delhi