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(University of London)
DEPARTMENT OF ECONOMICS
2010/11
Tutors
Lectures
Tutorials
Assignments Exercises will be handed out weekly during lectures and will be solved
during tutorials. Although they are not assessed, you are strongly advised
to answer all of the questions.
Blackboard
Calculators
Statistics:
The principal textbook is
Gujarati, D. and D. C. Porter (2010) Essentials of Econometrics, 4th Edition,
McGraw Hill.
This textbook covers most of the required topics in introductory level statistics and
econometrics, with the exception of the topics on index numbers.
McClave, J. T., P. G. Benson and T. Sincich (2005) Statistics for Business and
Economics, 9th ed., NJ: Pearson Prentice-Hall.
Newbold, P., W. L. Carlson, and B. Thorne (2009) Statistics for Business and
Economics, 7th ed., London: Prentice-Hall.
Sharpe, N. R., R. D. De Veaux, P. F. Velleman (2010) Business Statistics,
Pearson.
Thomas, R. L. (2005) Using Statistics in Economics, London: McGraw-Hill.
Wonnacott, T. H. and R. J. Wonnacott (1990) Introductory Statistics, 5th ed., John
Wiley & Sons.
These textbooks are of a similar technical level to Gujarati, but with different styles and
presentations, and can be used as a good substitute to the principle textbook for those
who might find it less accessible.
Lecture Plan
Term 1 Mathematics (6 weeks)
1 & 2. Linear (Matrix) algebra
Matrix, Elements of a matrix, Dimension, Row vector, Column vector, Scalar.
Equality of matrices, Addition, subtraction, scalar multiplication, matrix
multiplication, conformable matrices, rules of matrix operations. Transpose,
Properties of transpose, Symmetry, Identity matrix, Null matrix, Diagonal matrix,
Idempotent matrix. Quadratic form, Positive definite and negative definite
matrices. Determinants, minors, cofactors. Properties of determinants, nonsingular and singular matrices. Linear dependence and independence, rank of a
matrix, non-singular and singular matrices. Inversion, properties of inverse,
solution to a system of non-homogenous linear equations. Cramers rule.
Readings:
Abadir, K. M. and J. R. Magnus (2005) Matrix Algebra, Cambridge.
Chiang, A. C. and K. Wainwright (2005) Fundamental Methods of
Mathematical Economics, Forth Edition. McGraw-Hill. Chapter 4 and 5.
Dowling, E. T. (2000) Introduction to Mathematical Economics, Third
Edition. McGraw-Hill. Chapters 10-12.
Jacques (2009) Mathematics for Economics and Business, Sixth Edition.
Prentice-Hall. Chapter 7.
Thomas, R. L. (1999) Using Mathematics in Economics, Second Edition.
Addison-Wesley. Chapter 17.
3.
Calculus.
Revision of differentiation for functions of single variable; Revision of partial
differentiation; Jacobian determinants; Revision of differentials, rules of
differentials, total derivatives.
Readings:
Chiang, A. C. and K. Wainwright (2005) Chapters 6-8
Dowling (2001) Chapters 3-9.
Jacques (2009) Chapter 4-5.
Thomas (1999) Chapters 7-8.
Also on the basic concept of differentiation, see Caroline Dinwiddy (1967)
Elementary Mathematics for Economists, Oxford University Press.
4.
Optimization.
Relative extrema of a function of one choice variable, first derivative test for a
relative extremum, second derivative test, necessary versus sufficient conditions,
inflection points, nth derivative test for relative extrema or inflection points.
Optimum values of functions containing two or more choice variables, first-order
conditions, sufficiency and necessity, economic applications.
Readings:
Chiang, A. C. and K. Wainwright (2005) Chapters 9 and 11.
Dowling (2001) Chapter 6.
Thomas (1999) Chapters 10-12.
Jacques (2009) Chapter 5.
5.
Constrained Optimization.
General statement of constrained optimization. Solutions by direct substitution and
the Lagrange multiplier method, Interpretation of the Lagrangian multipliers,
Comparative static applications. Second order conditions, bordered Hessian.
Readings:
8.
(Week 9) Probability
Random variable and probability distribution function (p.d.f.); Discrete and
continuous r.v.; Statistical independence
Readings
Gujarati (2010, 4/d) Appendix A; (2006/1999) Chapter 2.
Kmenta (1997) Chapter 3.
McClave, J. T., P. G. Benson and T. Sincich (2005), chs. 3-4.
Newbold, P., W. L. Carlson, and B. Thorne (2009), chs. 3-5.
Thomas (2005) Prerequisites, pp.19-28.