📚 Introductory Econometrics with MORISTAT

A Practical Guide to Empirical Analysis

Naguib Lallmahomed · naglal@linux-mauritius.com · 2026-06-14

Chapter 2: Review of Statistics and Probability

🎯 Learning Objectives

Upon completing this chapter, you will be able to:

Understand basic probability concepts and random variables
Calculate and interpret summary statistics using MORISTAT
Understand the Normal, t, F, and Chi-squared distributions
Conduct hypothesis tests using MORISTAT
Construct and interpret confidence intervals

2.1 Random Variables and Probability Distributions

A random variable is a variable whose value is determined by the outcome of a random phenomenon.

Example: Calculating Expected Value

Suppose a stock has returns: 10% with probability 0.6, and -5% with probability 0.4.

E[R] = 0.10 × 0.6 + (−0.05) × 0.4 = 0.06 − 0.02 = 0.04 = 4%

2.2 Summary Statistics with MORISTAT

2.2.1 The SUMMARY Command

MORISTAT provides the SUMMARY command to compute descriptive statistics:

MORISTAT> LOAD wage_data.csv
MORISTAT> SUMMARY

2.2.2 The CORR Command

The CORR command displays the correlation matrix:

MORISTAT> CORR

2.3 Hypothesis Testing

2.3.1 The Five Steps of Hypothesis Testing

State the hypotheses (H₀ and H₁)
Choose the significance level (α)
Calculate the test statistic
Find the p-value
Make a conclusion

2.4 Practice Lab

In this lab, you will explore the wage_data.csv dataset:

# Step 1: Load the data
LOAD wage_data.csv

# Step 2: Examine the data
LIST
SUMMARY

# Step 3: Correlation
CORR

2.5 Key Terms

Random Variable Expected Value Variance Standard Deviation Correlation Normal Distribution t-Distribution Null Hypothesis (H₀) p-value Confidence Interval

2.6 What's Next?

In Chapter 3, we introduce the Simple Linear Regression Model.

→ Proceed to Chapter 3

🔄 Ready to connect with MORISTAT?