Dennis Leech, Economics, University of Warwick
Econometrics and Statistics Computing
Ever since the beginnings of the University Economics undergraduates have been serious computer users. It has always been a basic principle of the degree that it would have a substantial quantitative component including a core course in econometrics requiring a substantial amount of data processing and statistical analysis.
Having to do an Econometric Project meant that our graduates possessed the important skills required to conduct empirical research, including being able to formulate an econometric model, collect relevant data to estimate its parameters and test hypotheses about it, using appropriate software and write up the results. At the time it was introduced in the 1960’s this was distinctive and innovative and many other universities have subsequently followed a similar practice. Initially computing was confined to using specialist econometric software such as TSP which students would use in the third year but later it was extended to second year statistical work using Minitab.
Consequently over the years Warwick graduates have developed a reputation, among some employers and other universities, for having many of the skills necessary to do good applied economic research. For example they have often been able to enter organisations such as the Government Economic Service and carry out certain types of empirical work with the minimum of supervision and training. They have equally been well prepared in the computing background for postgraduate research degrees.
In the past five years, however, certain important aspects of the degree came under criticism, from students, for being academically narrow, with too little emphasis on developing transferable skills. After a thorough review it was concluded that while students’ undergraduate experience with information technology fitted them well for academic research it was of more limited value in the wider world of employment outside the field of economics.
We addressed the general issues raised by the students by making major revisions to the content and phasng of the degree syllabus, assessment methods and teaching and learning styles. Among other things this has involved a deepening and broadening of the use of information technology: all students now have to learn to use a range of software, not just for econometric analysis but as a generic tool. Besides word processing and other Windows software, all students now gain considerable experience in the use of a commercial spreadsheet in their first and second years.
The Educational Value of Spreadsheets
A spreadsheet such as Excel has enormous value in economics because it is a powerful and convenient tool with a wide range of uses. Students can easily set up a spreadsheet to carry out numerical simulations and gain a deeper understanding of principles. For example it can show the properties of dynamic models very easily; it can be used for graphical comparative static analysis of simple equilibrium models; its built-in optimisation features have many obvious applications in constrained optimisation problems; its matrix algebra features can be used for input-output analysis.
We now teach basic economic statistics using Excel, for which it has many advantages, rather than a statistics package such as Minitab. Its ease of use makes it ideal for doing analyses which students have traditionally found forbidding because of the large amount of arithmetic required, such as national income accounting, seasonal adjustment of time series or price index number calculations.
To create a spreadsheet students must understand all the details of the model or statistical procedure, whereas, by contrast, specialist statistical packages have the calculations pre-programmed and work like a “black box”. Their use therefore fosters a “deeper” learning of ideas which can sometimes be presented in lectures in a way that, although theoretically rigorous, students understand in only a limited way. Moreover, students find spreadsheets rewarding to use because of their intrinsic power and user-friendliness and also their obvious relevance to the kind of employment many of them aspire to.
The World Wide Web and Campus Network
The World Wide Web is used by one or two lecturers to provide course information including lecture notes, but this practice is not yet common. There are many resources for economists on the Web. A good introduction is “Resources for Economists on the Internet”.
For much of the coursework involving economic statistics and econometrics the students are supplied with data sets prepared by the course leader and made available on the Campus Network. All students make use of the new version (Navidata format) of the ONS (formerly CSO) Databank available on the campus network via the Library CD-ROM network.
PC Ready Reckoner
The PC Ready Reckoner is a tool which allows the students to use real forecasting models of the UK economy (for example that used by HM Treasury) to analyse the likely effects of various policy options such as changes in interest rates. This is used both for teaching basic macroeconomics and also for studying the properties of dynamic macroeconometric models. A demonstration of it is available on http://www.warwick.ac.uk/~mbras/rr.html. PC Ready Reckoner was developed by the ESRC Macroeconomic Modelling Bureau, which is part of the Economics Department.
The Pattern of Use of Information Technology
The phasing of the formal learning of information technology is as follows
First Year All students now do a course unit, Computing and Data Analysis, taught by supported self study: there are no lectures but students are given study material to learn Windows, Word and Excel, supported by fortnightly workshops in the first term. They must complete four assessed coursework assignments: one using Word (a short report and CV), and three using Excel and Word to perform and report analyses of economic statistics (trends in GDP from the UK National Accounts in terms of expenditure categories, income shares and output of industrial sectors; frequency distributions and price index number calculations; seasonal adjustment of macroeconomic time series.)
Second Year : All students do a course in Economic Statistics and Econometrics. They do assessed work on sampling distributions using Excel and on econometrics using PCGIVE.
Third Year : All students take a course involving the application of economics and must do a Project; they have a wide choice of topics and many use information technology, as necessary, using their previous experience. More specialised software is used in certain option courses. For example GAMS for the Economic Planning and Project Appraisal, TSP(on Unix), LIMDEP and PCReady Reckoner for Applied Econometrics
Department of Economics
University of Warwick