Using Spreadsheets to Conduct Monte Carlo Experiments for Teaching Introductory Econometrics

The Monte Carlo experiment can be a valuable pedagogical tool for introductory econometrics courses. In the past, however, the practicality of having students perform Monte Carlo simulations was limited because of the high opportunity cost involved in learning to program. This paper argues that spreadsheets offer a means for beginning students to conduct meaningful Monte Carlo experiments at a relatively low opportunity cost and provides instructions on how to do so with Microsoft Excel. Suggestions are offered for using spreadsheet-based Monte Carlo experiments effectively in teaching basic econometric concepts.