diff --git a/lectures/lln_clt.md b/lectures/lln_clt.md index 291690e0..83f21d43 100644 --- a/lectures/lln_clt.md +++ b/lectures/lln_clt.md @@ -51,6 +51,9 @@ will converge to their population means. Let's see an example of the LLN in action before we go further. +```{prf:example} +:label: lln_ex_ber + Consider a [Bernoulli random variable](https://en.wikipedia.org/wiki/Bernoulli_distribution) $X$ with parameter $p$. This means that $X$ takes values in $\{0,1\}$ and $\mathbb P\{X=1\} = p$. @@ -68,6 +71,7 @@ $$ \mathbb E X = 0 \cdot \mathbb P\{X=0\} + 1 \cdot \mathbb P\{X=1\} = \mathbb P\{X=1\} = p $$ +``` We can generate a draw of $X$ with `scipy.stats` (imported as `st`) as follows: @@ -369,7 +373,8 @@ The LLN fails to hold here because the assumption $\mathbb E|X| < \infty$ is vio The LLN can also fail to hold when the IID assumption is violated. -For example, suppose that +```{prf:example} +:label: lln_ex_fail $$ X_0 \sim N(0,1) @@ -384,6 +389,7 @@ $$ $$ Therefore, the distribution of $\bar X_n$ is $N(0,1)$ for all $n$! +``` Does this contradict the LLN, which says that the distribution of $\bar X_n$ collapses to the single point $\mu$? @@ -439,9 +445,9 @@ n \to \infty Here $\stackrel { d } {\to} N(0, \sigma^2)$ indicates [convergence in distribution](https://en.wikipedia.org/wiki/Convergence_of_random_variables#Convergence_in_distribution) to a centered (i.e., zero mean) normal with standard deviation $\sigma$. -The striking implication of the CLT is that for **any** distribution with +The striking implication of the CLT is that for any distribution with finite [second moment](https://en.wikipedia.org/wiki/Moment_(mathematics)), the simple operation of adding independent -copies **always** leads to a Gaussian(Normal) curve. +copies always leads to a Gaussian(Normal) curve. @@ -599,7 +605,7 @@ $$ $$ where $\alpha, \beta, \sigma$ are constants and $\epsilon_1, \epsilon_2, -\ldots$ is IID and standard norma. +\ldots$ are IID and standard normal. Suppose that diff --git a/lectures/unpleasant.md b/lectures/unpleasant.md index c3592872..676edfa1 100644 --- a/lectures/unpleasant.md +++ b/lectures/unpleasant.md @@ -97,7 +97,7 @@ $\widetilde R \check B_{-1}$ is a *real* quantity, being measured in time $0$ go ### Open market operations -At time $0$, government can rearrange its portolio of debts with subject to the following constraint (on open-market operations): +At time $0$, government can rearrange its portfolio of debts subject to the following constraint (on open-market operations): $$ \widetilde R B_{-1} + \frac{m_0}{p_0} = \widetilde R \check B_{-1} + \frac{\check m_0}{p_0} @@ -152,7 +152,7 @@ running monetary and fiscal policies. Here, by **fiscal policy** we mean the collection of actions that determine a sequence of net-of-interest government deficits $\{g_t\}_{t=0}^\infty$ that must be financed by issuing to the public either money or interest bearing bonds. -By **monetary policy** or **debt-management policy**, we mean the collection of actions that determine how the government divides its portolio of debts to the public between interest-bearing parts (government bonds) and non-interest-bearing parts (money). +By **monetary policy** or **debt-management policy**, we mean the collection of actions that determine how the government divides its portfolio of debts to the public between interest-bearing parts (government bonds) and non-interest-bearing parts (money). By an **open market operation**, we mean a government monetary policy action in which the government (or its delegate, say, a central bank) either buys government bonds from the public for newly issued money, or sells bonds to the public and withdraws the money it receives from public circulation. @@ -315,7 +315,7 @@ These parameter settings mean that just before time $0$, the "central bank" sell That leaves the public with less currency but more government interest-bearing bonds. -Since the public has less currency (it's supply has diminished) it is plausible to anticipate that the price level at time $0$ will be driven downward. +Since the public has less currency (its supply has diminished) it is plausible to anticipate that the price level at time $0$ will be driven downward. But that is not the end of the story, because this **open market operation** at time $0$ has consequences for future settings of $m_{t+1}$ and the gross-of-interest government deficit $\bar g_t$. @@ -418,7 +418,7 @@ plt.xlabel('$m_0$') plt.show() ``` -Now let's write and implement code that let's us experiment with the time $0$ open market operation described earlier. +Now let's write and implement code that lets us experiment with the time $0$ open market operation described earlier. ```{code-cell} ipython3 def simulate(m0, model, length=15, p0_guess=1):