SBM-NMIMS: COURSE TEACHING PLAN

Assurance of Learning AOL Specific

Course
Code
Econometric Methods for decision making (2024)
Course Title
Course Chandrima Sikdar
Instructor/s
Credit 3 credits (100 marks paper )
Value
Programme FTMBA Trimester V
& Trimester
Basic Calculus, Elementary Coordinate Geometry, Basic statistical concepts, MS-Excel,
Knowledge of Economics, Finance, Marketing and Operations
Pre-requisite
Knowledge of Economics, Finance and Marketing as a subject will have added advantage

CLO 1) Understanding of the econometric principles and theory applied by businesses and
economies in the real world for estimation and prediction exercises (PLO2b)

Learning CLO 2) Critically evaluate the various econometric concepts, models and tools to be able to
Objectives understand a robust estimation and prediction framework (PLO2b)

CLO 3) Identify problems from functional areas of business, critically analyze them based on
model building exercise and come up with solutions/decisions-based model results (PLO3c)

Learning 1) After completion of the course, students would be able to understand, identify, evaluate
Outcomes and apply the different econometric concepts, tools and models.
(Must be
connected to 2) They will have a critical understanding of how these econometric tools are used for
Learning business decision making and for solving specific business problems.
Objectives)
Econometrics is a research tool employed in the business disciplines of accounting, finance,
marketing, management etc. This course on econometrics has been designed so as to develop
the analytical and technical skills of the participants. It will enable them to understand
econometric methods and their application in the field of business and solve the practical
problems related to analyzing trends and decision-making.

The course will help the participants to handle some software that deals with statistics and
econometric analysis and modeling the data to analyze the scenario in the respective fields of
Economics, Finance, etc. It will also focus on drawing inferences from samples and
Course projections from historical data.
Description
An important goal of this course is for students to become proficient in identifying
econometric problems from real life business situations and give it a shape or structure so that
statistical test can be carried out and finally business decisions can be taken out of the
exercise. Hence the course will rely heavily on working hands-on with data in class and
during after class self-activity and on analyzing some relevant research papers.

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 Specific 3 AOL CLO 1 CLO 2 CLO 3 CLO 4
assessment Credit Instruments
methods (*)
Class 10
Participation
Quiz 20 Embedded 10 10
questions
Group 30 30
Rubrics
Assignment
Evaluation Final Exam 40 Embedded 20 20
Pattern questions
Total 100
*AOL Assessment Instruments:

 Embedded Questions: Quiz, Class Test, Midterm Examination, Final Examination

 Rubrics: Case & Article Discussion, Individual Assignment

Group Projects & Viva’s, Case Problem analysis, Oral and written
communication presentations, Role Play,
Group Presentation, Group Project etc.

Asynchronous: Pre Synchronous:

Read and Post Presentations/Hands-on class
Topics / Sub -topics Read: Chapter exercises/Articles
Sessions detail Discussion/Quizzes/Class
/ Article Reference participation/Feedback and
/ Case Studies Learning Outcome if provided
session wise
Review of statistics Post Read: Revision/Discussion of basic
o Revision of basic statistics with statistical tools of estimation
special focus on probability and Aczel: Chapters 5-7, and hypothesis testing.
hypothesis testing - Sampling pp: 206- 322.
distributions and inference, the Learning Outcomes: the
Central Limit theorem, After class (self- students would be able to
Confidence intervals activity): explain the need for
o Conducting statistical tests Hands on exercise econometric modelling to
1 through statistical package (with data and decode and solve a
analytical exercises) business/economic problem and
Introduction to Econometrics using excel on be able to identify type of data
application of these sets
Understanding types of Data tools.
o Cross Section
o Time Series
o Panel

Cross Section Data Modelling

The Classical Linear Regression Model Post Read: Presentation and explanation of
o The Simple Linear Regression CLRM and hands-on problem-
Model Wooldridge: Chapter solving exercise (with data) on
o Estimation of the simple linear 2, pp: 22-41. estimation.
regression model- the method of Gujarati (by Applications/ Problem solving
Ordinary Least Squares examples): Chapter (hands-on exercise)*: Wage
2
o The CLRM 1, pp: 2-21. regression; job satisfaction
o Variance & Standard errors of survey.
OLS estimators
o Hypothesis testing for population Learning Outcomes: the
regression coefficients students would be able to
o Measure of goodness of fit explain the ordinary least square
method of minimizing the

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 idiosyncratic error and interpret
the coefficients of a CLRM

The Classical Linear Regression Model Post Read: Presentation and explanation of
o Units of Measurement and CLRM and hands-on problem-
Functional Form- The Effects of Wooldridge: Chapter solving exercise (with data) on
Changing Units of Measurement 2, pp: 22-60. estimation
on OLS Statistics, Incorporating Applications/ Problem solving
Nonlinearities in Simple (hands-on exercise): Wage
Regression, The Meaning of regression; job satisfaction
3 "Linear" Regression survey
o Expected Values and Variances
of the OLS Estimators - Learning Outcomes: Using a
Unbiasedness of OLS, Variances cross-section data and eviews
of the OLS Estimators, software, students would be able
Estimating the Error Variance to run an econometric model
o Regression Through the Origin and interpret the output sheet
completely

The Classical Linear Regression Analysis Post Read: Presentation and explanation of
o Motivation for Multiple MLR model i.e. CLRM with
regression (MLR) Wooldridge: Chapter more than two independent
o Estimation in Multiple 3, pp: 68-89. variables involving cross
Regression Analysis section data and hands-on
problem-solving exercise (with
data) on estimation in MLR
model.
Applications/ Problem solving
(hands-on exercise): Wage
4
regression; job satisfaction
survey.

Learning Outcomes: Using a

cross-section data and eviews
software, students would be able
to run an econometric model
and interpret the output sheet
and explain the nuances of MLR
model

The Classical Linear Regression Analysis Post Read: Hand-on problem solving
o Inference in Multiple exercise (with cross section
Regression Analysis Wooldridge: Chapter data) for MLR model and
4, pp: 117-157. drawing inferences
Applications/ Problem solving
(hands-on exercise): Wage
regression; job satisfaction
survey
5
Learning Outcomes: Using a
cross-section data and eviews
software, students would be able
to run an econometric model
and interpret the output sheet
and explain the nuances of MLR
model

Diagnostic tests and model adjustment in Post Read: Presentation and explanation of
Cross Section Regression diagnostic tools of MLR model-
o Functional form and explanatory Gujarati (by understanding importance of
6
variable examples): Chapter right functional form in a
2, pp: 23-45. model.
Applications/ Problem solving
(hands-on exercise): US
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 production function, Measuring
GDP growth

Learning Outcomes: Using a

cross-section data and eviews
software, students would be able
to run an econometric model
and check the suitability of the
selected functional forms of the
variables

Diagnostic tests and model adjustment in Post Read: Presentation and explanation of
Cross Section Regression for obtaining diagnostic tools of MLR model-
BLUE Gujarati (by importance of detection of
o Multicollinearity examples): Chapter multicollinearity and its solution
4, pp: 67-79. for a robust model.
Applications/ Problem solving
After class (self- (hands-on exercise):
activity): Consumption, income and wage
Hands on exercise
with data: Learning Outcomes: Using a
7 Measuring GDP cross section data and eviews
growth; software, model would be run to
US production introduce the students to the
function diagnostic check of
multicollinearity and its
importance for CLRM; they
should be able to identify the
technical and practical problems
connected with it and suggest
the ways to remedy it

Diagnostic tests and model adjustment in Post Read: Presentation and explanation of
Cross Section Regression for obtaining diagnostic tools of MLR model-
BLUE Gujarati (by importance of detection of
o Heteroscedasticity examples): Chapter heteroscedasticity and its
5, pp: 82-95. solution for a robust model.
Applications/ Problem solving
After session (hands-on exercise):
activity (self-study Employment Size and
by students): Revisit compensation of employees in
application problems manufacturing
1-6.
8
Learning Outcomes: Using a
cross-section data and eviews
software, model would be run to
introduce the students to the
diagnostic check of
heteroscedasticity and its
importance for CLRM; they
should be able to identify the
technical and practical problems
connected with it and suggest
the ways to remedy it

Diagnostic tests and model adjustment in Post Read: Presentation and explanation of
Cross Section Regression diagnostic tools of MLR model-
o Disturbance distribution Heij et al. Chapter 5, importance of detection of
pp: 378-394. normality of error distribution
9
and its solution for a robust
model.
Applications/ Problem solving
(hands-on exercise): Wage
regression
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 Quiz1 (Total marks: 10):
Topics covered from sessions 1
to 8.

Learning Outcomes: Using a

cross-section data and eviews
software, model would be run to
introduce the students to the
diagnostic check of normality
and its importance in
estimation; they should be able
to identify the technical and
practical problems connected
with it and suggest the ways to
remedy it

Diagnostic tests and model adjustment in Post Read: Presentation and explanation of
Cross Section Regression for obtaining Heij et al. Chapter 5, diagnostic tools of MLR model
BLUE pp: 396-418. - importance of detection of
o Endogenous regressors and endogeneity and its solution for
instrumental variables a robust model.
Applications/ Problem solving
(hands-on exercise): Wage
regression

Learning Outcomes: Using a

10 cross section data and eviews
software, model would be run to
introduce the students to the
diagnostic check of
endogeneity and its
importance for CLRM; they
should be able to identify the
technical and practical problems
connected with it and suggest
the ways to remedy it

Regression Analysis with Qualitative Post Read: Presentation and explanation of

Information: Binary (or dummy) Variables Wooldridge: Chapter MLR models with qualitative
o Describing Qualitative 7, pp: 225- 246. independent variables.
Information After class (self-
o A Single Dummy Independent activity): Applications/ Problem solving
Variable Hands on exercise (hands-on exercise): Model of
o Using Dummy Variables for with data: wage determination
Multiple Categories Model of Fashion Discussion/Feedback on the
o Interactions Involving Dummy Sales. Quiz conducted in session 9.
11
Variables
Learning Outcomes: Using a
cross section data and eviews
software, model would be run to
introduce the students to
handling qualitative
independent variables in a
CLRM; they should be able to
incorporate and interpret them

Regression Analysis with Qualitative Post Read: Presentation and explanation of

Information: Binary (or dummy) Variables MLR models with Qualitative
o Application of Dummy variables Wooldridge: Chapter dependent variables – LPM.
12
o Linear Probability Model 7, pp: 246- 254. Applications/ Problem solving
(hands-on exercise): Wage
After class (self- determination
activity): Learning Outcomes: Using a
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 Hands on exercise cross section data and eviews
with data: software, model would be run to
Gross private introduce the students to
investment & savings handling qualitative
during recession, independent variables in a
Model of fashion CLRM; the they should be able
sales to identify the limitations of
Linear Probability Model

Binary Repsonse Models Post Read: Presentation and explanation of

o Logit Model MLR models with Qualitative
o Probit Model Gujarati (by dependent variables –Logit,
o Idea of Tobit model examples): Chapter Probit & Tobit.
8, Applications/ Problem solving
pp: 141-154. (hands-on exercise):
Ownership of PC; Labour force
After session participation by women.
activity (self-study
13 by students): Revisit Learning Outcomes: Using a
problems 1-10. cross-section data and eviews
software, model would be run to
introduce the students to
handling limitations of LPM;
they would understand the
nonlinearity of Logit/Probit
models and explain the remedy
done by these models to the
limitations posed by LPM

Time Series Data Modelling

Time Series and Dynamic Models & Post Read: Presentation and explanation
related diagnostic test and model of MLR models with time
adjustments Wooldridge: Chapter series data and specific
o Examples of time series 10, pp: 342-360. problems thereof.
regression Applications/ Problem
o Finite Sample Properties of OLS After session solving (hands-on exercise):
under Classical Assumptions activity (self-study Money supply model;
o Functional form, Dummy by students): Quantitative Easing in the
14 Variables & Index Number Analysis using data: USA
Volcker’s anti-
inflationary measure Learning Outcomes: the
in USA; students would be introduced to
time series data modelling; and
the assumptions of CLRM and
arriving at BLUE in case of
time series data

Time Series and Dynamic Models & Post Read: Presentation and explanation of
related diagnostic test and model diagnostic tools of MLR model
adjustments Wooldridge: Chapter involving time series data –
o Trends & Seasonality 10, detection of trend, seasonality
o Autocorrelation/Serial pp: 360-369. and autocorrelation and
Correlation Gujarati (by handling them for a robust
examples): Chapter 6, model
15 pp: 97-113. Applications/ Problem solving
(hands-on exercise): Money
After session supply model; Regression
activity (self-study Personal consumption
by students): expenditure on Personal
Analysis using data: Disposable income
Did inflation
targeting work in Assigning Group assignments

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 India? on econometric analysis using
firm level/macro level cross
section, time series and panel
data. Briefing on the group
assignment and on preparation
of report to be submitted

Learning Outcomes: the

students would be able to
identify the diagnostic problems
of trend, seasonality and
autocorrelation; identify the
practical and technical problems
associated with these issues and
suggest ways to solve them

Time Series and Dynamic Models & Post Read: Presentation and explanation of
related diagnostic test and model diagnostic tools of MLR model
adjustments Gujarati (by involving time series data –
o Stationarity & Cointegration examples): Chapters detection of no-stationarity,
13-14, pp: 206-236. cointegration and handling
them for a robust model.
After session Applications/ Problem solving
activity (self-study (hands-on exercise): Dollar-
by students): Euro Exchange rate; India’s
16 Hands-on exercise carbon emission and population.
with data - IBM daily
closing prices; Learning Outcomes: the
Review of papers on students would be able to
India’s carbon identify the importance of pre-
emission and growth; modelling diagnostic of
An Econometric stationarity and cointegration
Model of New-car and appreciate the choice of
Demand in the UK. modelling based on these
diagnostics

Time Series and Dynamic Models Post Read: Presentation and explanation of
o VAR modelling dynamic time series model
o VECM modelling The Lead Lag estimation techniques
o Introduction to ARDL Relationship Between Applications/ Problem solving
Spot and Futures (hands-on exercise): Data on
Markets in the India’s carbon emission
Energy Sector
(Source: International
Journal of Energy Quiz2 (Total marks: 10):
17 Economics and Topics covered from sessions 9
Policy, Vol. 7, issue to 15
4, 2017). Will be
shared Learning Outcomes: the
students would be able to
suggest the usage of different
dynamic time series modelling
based on stationarity and
cointegration checks

Time Series and volatility modelling Post Read: Presentation and explanation of
o ARCH & GARCH models forecasting techniques with
Gujarati (by time series data.
examples): Chapter
18
15, pp: 238 -249. Applications/ Problem solving
(hands-on exercise): India’s
After session carbon emission; New York
activity (self-study Stock Exchange Price Change;
by students): US Inflation Rate;
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 Review of research
paper: Impact of Learning Outcomes: the
Flow of FDI & FII on students would be able to model
Indian Stock Market volatility and identify the
internal and external reasons for
volatility and also identify
riskiness associated with returns

Pooled Data and Panel Data Modelling

Pooling Cross Sections across Time: Post Read: Discussion on the Research
Simple Panel Data Methods paper on: Impact of Flow of
o Pooling independent Cross Wooldridge: Chapter FDI & FII on Indian Stock
Sections across Time 13, pp: 444-461. Market
o Policy Analysis with Pooled Presentation and explanation of
Cross Sections After session estimation with cross section
o Two-Period Panel Data Analysis activity (self-study and time series data.
and policy analysis with two by students): Review Applications/ Problem solving
period Panel Data of paper on Corporate (hands-on exercise): Review
19 o Differencing with more than two Size, Profitability and research paper on: Assessment
time periods market value: An of R&D and its impact on
econometric panel Indian manufacturing industries.
analysis of listed
firms in Kenya. Learning Outcomes: the
students would be introduced to
pooled cross section and time
series data and panel data
modelling and the nuances of
the same.

Summarizing the key learnings and Course synthesis.

Learning Outcomes: the

students will be able to explain
the flow of choice for
econometric models given the
20 specific business/economic
problem and the underlying data
set and solve the
business/economic problem
based on robust econometric
modelling

Reading List
and References:
References
 J. M. Wooldridge: Introductory Econometrics: A Modern Approach, 4th Edition,
(along with Thomson South-Western, 2009.
details of  Complete Business Statistics: Amir, D. Aczel & J. Sounderpandianby, 7th edition,
year of McGraw Hill, 2009 (Ebook will be shared with students).
Publication)  Basic Econometrics: Damodar N Gujarati, Dawn Porter and Sangeetha Gunasekar,
McGraw Hill, 2012.
 Econometrics by example: Damodar Gujarati, Palgrave Macmillan, 2012.
 Econometric Methods with application in Business and Economics: Heij, C., Boer,
P. D., Franses, P.H., Kloek, T and van Dijk, H.K., Oxford University Press, 2004
(Ebook will be shared with students)
 EVIEWS Manual. (https://www.eviews.com/illustrated/EViews%20Illustrated.pdf)

*all hands -on application problems will be shared systematically before the class

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Instruction for Use of Intellectual Property of NMIMS SBM (By Order, NMIMS SBM)
Course Outlines are strictly for private and restricted circulation among the concerned Faculty
Members and the Students of this Programme. They are permitted to use the contents for study
and research purpose only. No part of this Course outline can be copied, reproduced, shared and/or
circulated in any manner, through any mode, for any purpose and under any circumstances
whatsoever; which is contrary to the stated restricted uses and purposes. The person responsible
for violating this Instruction shall be liable for appropriate disciplinary action initiated by SBM.
Disclaimer
While care has been taken in compiling this Course outline, The School of Business Management of
SVKM’s NMIMS University shall not be held liable in any manner to any person for any mistake and /
or omission in the contents of the Course outline.

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 Group assignment for Econometric Methods for Decision Making

The group assignment of 30 marks would be an econometric analysis of a business/economic problem

based on an econometric model building exercise. The assignment will test the students understanding
of the theoretical concepts developed and discussed in class and test their ability to apply it to solve
business problems based on robust econometric models.

A. The assignment

Identify a business/economic problem. Explain the solution to the problem based on a

robust econometric model.

B. Deliverables:

 The groups will identify an economic or business problem from their respective areas of
interest (finance, marketing and so on). Refer to the research papers posted in portal to draw
ideas.
 Propose an econometric model to identify the cause/causes of the problem.
 Test for the robustness of the model.
 Suggest solutions to the problem based on the model building exercise.
 The groups can submit a proposal (optional; not a part of evaluation component) to inform
and get approval on their choice of their problem.
 Data included for modelling may be from databases like Capitaline, World Development
Indicators; IMF; individual company or government websites, prowess, bloomberg etc. The
sources of data should be mentioned.
 Groups will submit a report (softcopy) by end of the 20th session (EOD) of the course.
 The outer limit for the size of the final report should be 10 pages. If required the workings
may be submitted as a separate file.

C. Organization of the report

 Title – it should be interesting and justified by the work

 Introduction – should include importance of the economic/business problem in the real
world
 Objective of the analysis
 Explanation of the Econometric Model and why this is the appropriate model
 Providing solutions to the problem based on the model
 Conclusion

******

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 Course: Econometric Methods for Decision Making

Trimester V
Assessment: Group Assignment

CLO3 – Critically analyze a business problem and come up with solutions/decisions based on
econometric model building exercise (PLO3c)

Faculty : _______________________________________________________

Name of the student : _______________________________________________________

Roll Number : _______________________________________________________

Aspect/Learnin Unsatisfact Satisfactor Good Very Good Exemplary Scor

g Output ory y (61%- 71%-85% >85% e
(30-40% (41%- 70%)
range) 60%)
Identifies the Demonstrate Demonstrat Demonstrat Demonstrates Demonstrat
rationale for the s poor es partial es adequate advanced es excellent
study and knowledge knowledge knowledge knowledge and knowledge
accordingly & and and understanding and
builds the understandin understandi understandi of the business understandi
introduction to g of the ng of the ng of the /economic ng of the
and objective of business business business problem. business
the study /economic /economic /economic Adequately /economic
problem. problem. problem. demonstrates problem.
(5 marks) Fails to Partially Fairly the importance Does an
demonstrate demonstrat demonstrat of such analysis excellent
the es the es the for demonstrati
importance importance importance business/econo on of the
of such of such of such mic decision importance
analysis for analysis for analysis for making. of such
business business business analysis for
/economic /economic /economic business
decision decision decision /economic
making making making. decision
making.

Identifies the Student fails Student Student Student does a Student

economic and to identify partially identifies good job of does an
econometric the identifies the identifying the excellent
model towards economic the economic economic and job of
analyzing the and economic and econometric identifying
problem related econometric and econometri model towards the
to a functional model econometri c model analyzing the economic
area of towards c model towards business / and
business/econo analyzing towards analyzing economic econometri
mics and the business analyzing the problem and c model
explains the /economic the business does a good job towards
rationale problem and business /economic of explaining analyzing
behind the fails to /economic problem the rationale for the
choice of the explain the problem and more the choice of business /
econometric rationale for but fails to or less the particular economic
model the choice of explain the explains the econometric problem
the rationale rationale model and does an
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(5 marks) particular for the for the excellent
econometric choice of choice of job of
model the the explaining
particular particular the
econometri econometri rationale
c model c model for the
choice of
the
particular
econometri
c model

Using data Student fails Student Student Student does a Student

establishes a to identify partially identifies reasonably does an
robust model the right identifies all the right good job of excellent
based on the theories, the right theories, identifying all job of
econometric tools and theories, tools and the right identifying
theories, tools diagnostics tools and diagnostics theories, tools the right
and diagnostics and fails to diagnostics for and diagnostics theories,
developed as establish a and robustness and hence tools and
part of the robust model establishes checks but establishes a diagnostics
course for a partially fails to reasonably and
analyzing robust apply them robust model establishes
(10 marks) the business model for all to the for analyzing a very
/economic analyzing empirical the business robust
problem the data and /economic model for
business hence problem analyzing
/economic establishes the
problem a partial business
robust /economic
model for problem
analyzing
the
business
/economic
problem

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Based on the Demonstrate Demonstrat Demonstrat Demonstrates Demonstrat
modelling s vague es partial es reasonably es excellent
exercise understandin understandi understandi good understandi
provides g and ability ng and ng and understanding ng and
solution to the to interpret ability to ability to and ability to ability to
problem the results in interpret interpret interpret the interpret
identified the output the results the results results in the the results
sheet of the in the in the output sheet of in the
(5 marks) model and output output the model and output
hence is sheet of the sheet of the hence is able to sheet of the
unable to model and model but come up with model and
come up hence is is not able focused hence is
with a able to to articulate solution to the able to
solution to come up and come business / come up
the business with partial up with a economic with
/ economic solution to focused problem focused
problem the solution to identified solution to
identified business / the the
economic business / business /
problem economic economic
identified problem problem
identified identified

Conclusion Conclusions Conclusion Conclusion Conclusions Conclusion

related to the do not s drawn s drawn follow clearly s clearly
business/econo clearly more or more or from the follow from
mic problem follow from less follow less follow theoretical and the
(5 mark) the from the from the empirical theoretical
theoretical theoretical theoretical model building and
and and and exercise which empirical
empirical empirical empirical shows good model
model model model conceptual building
building building building clarity and exercise
exercise exercise exercise rigor with which
undertaken undertaken undertaken respect to the shows
and but and model building exceptional
conceptual conceptual conceptual exercise conceptual
clarity and clarity and clarity and clarity and
rigor with rigor with rigor with rigor with
respect to respect to respect to respect to
the the the the model
modelling modelling modelling building
exercise is exercise is exercise is exercise
missing missing fairly
present

Total Score

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