Fundamentals of Python for Financial Econometrics

Chapter 14: Probability, Simulation, and Statistical Inference

How can uncertainty be represented, simulated, and summarized without pretending that one sample is the population?

Loading notebook...Work with random variables and common distributionsMonte Carlo simulationsampling distributions and standard errorsconfidence intervals, tests, and power

Notebook lab guide

Related dataset

Ceteris Lab teaching sample

Estimated time

35 to 55 min

Packages

pandas, numpy, statsmodels, patsy, scipy

Expected output

A regression or inference table with coefficients, uncertainty, and short interpretation notes.

Learning goals

Load and inspect Ceteris Lab teaching sample.
Run the Python cells connected to Probability, Simulation, and Statistical Inference.
Interpret the output using Work with random variables and common distributions and Monte Carlo simulation.

Common errors

File not found: check that wage_sample.csv is installed or use the course data folder.
Package import error: use the browser notebook first, then download for local Jupyter if your local packages differ.
Column name error: compare your variable names with the dataset variables listed for this notebook.

Dataset path helper

import pandas as pd

df = pd.read_csv("/data/wage_sample.csv")
df.head()

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