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Teaching basic econometric concepts using Monte Carlo simulations in Excel

Author

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  • Briand, Genevieve
  • Hill, R. Carter

Abstract

Monte Carlo experiments can be a valuable pedagogical tool for undergraduate econometrics courses. Today this tool can be used in the classroom without the need to acquire any specialized econometrics software. This paper argues that Microsoft Excel, which is already available at many office and home computer stations, offers the opportunity to run meaningful Monte Carlo simulations and to successfully teach students basic econometric concepts. The reader is guided, step-by-step, through two different exercises. The first one is a repeated sampling exercise showing that least squares estimators are unbiased. The second one expands on the first to explain the true meaning of confidence interval estimates of least squares estimators.

Suggested Citation

  • Briand, Genevieve & Hill, R. Carter, 2013. "Teaching basic econometric concepts using Monte Carlo simulations in Excel," International Review of Economics Education, Elsevier, vol. 12(C), pages 60-79.
    • Handle: RePEc:eee:ireced:v:12:y:2013:i:c:p:60-79
    DOI: 10.1016/j.iree.2013.04.001
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    Cited by:

    1. Marketa Halova Wolfe, 2023. "Incorporating Racial Justice Topics into an Econometrics Course," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 49(3), pages 312-327, June.
    2. John Gilbert & Onur A. Koska & Reza Oladi, 2023. "Building and using nonlinear simulations in Excel with an application to the specific factors model," Southern Economic Journal, John Wiley & Sons, vol. 89(4), pages 1242-1265, April.
    3. Gorry, Devon & Gilbert, John, 2015. "Numerical simulations of competition in quantities," International Review of Economics Education, Elsevier, vol. 18(C), pages 49-61.
    4. John Gilbert & Onur A. Koska & Reza Oladi, 2022. "Building and Using Nonlinear Excel Simulations: An Application to the Specific Factors Model," Working Papers in Economics 22/08, University of Canterbury, Department of Economics and Finance.
    5. Tanya Byker & Amanda Gregg & Dylan Mortimer, 2022. "Interactive Web-based Simulations to Teach Econometrics: Making Abstract Concepts Tangible," Journal of Economics Teaching, Journal of Economics Teaching, vol. 7(2), pages 92-102, May.
    6. Vikram Dayal & Anand Murugesan, 2020. "Demystifying causal inference: ingredients of a recipe," IEG Working Papers 393, Institute of Economic Growth.

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