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 Contents vii

9-4b Measurement Error in an Explanatory Problems 361

Variable 310 Computer Exercises 363
9-5 Missing Data, Nonrandom Samples, and Outlying
Observations 313
chapter 11 Further Issues in Using OLS with
9-5a Missing Data 313
9-5b Nonrandom Samples 315 Time Series Data 366
9-5c Outliers and Influential Observations 317
11-1 Stationary and Weakly Dependent Time
9-6 Least Absolute Deviations Estimation 321 Series 367
Summary 323 11-1a Stationary and Nonstationary Time Series 367
Key Terms 324 11-1b Weakly Dependent Time Series 368
Problems 324 11-2 Asymptotic Properties of OLS 370
Computer Exercises 328 11-3 Using Highly Persistent Time Series in Regression
Analysis 376
Part 2 11-3a Highly Persistent Time Series 376
11-3b Transformations on Highly Persistent Time
Regression Analysis with Time Series 380
11-3c Deciding Whether a Time Series Is I(1) 381
Series Data 333
11-4 Dynamically Complete Models and the Absence of
Serial Correlation 382
chapter 10 Basic Regression Analysis with 11-5 The Homoskedasticity Assumption for Time
Time Series Data 334 Series Models 385
Summary 386
10-1 The Nature of Time Series Data 334
Key Terms 387
10-2 Examples of Time Series Regression
Models 335 Problems 387
10-2a Static Models 336 Computer Exercises 390
10-2b Finite Distributed Lag Models 336
10-2c A Convention about the Time Index 338 chapter 12 Serial Correlation and
10-3 Finite Sample Properties of OLS under Classical Heteroskedasticity in Time Series
Assumptions 339
Regressions 394
10-3a Unbiasedness of OLS 339
10-3b The Variances of the OLS Estimators and the 12-1 Properties of OLS with Serially Correlated
Gauss-Markov Theorem 342 Errors 395
10-3c Inference under the Classical Linear Model 12-1a Unbiasedness and Consistency 395
Assumptions 344 12-1b Efficiency and Inference 395
10-4 Functional Form, Dummy Variables, and Index 12-1c Goodness-of-Fit 396
Numbers 345 12-1d Serial Correlation in the Presence
10-5 Trends and Seasonality 351 of Lagged Dependent Variables 396
10-5a Characterizing Trending Time Series 351 12-2 Serial Correlation–Robust Inference
10-5b Using Trending Variables in Regression after OLS 398
Analysis 354 12-3 Testing for Serial Correlation 401
10-5c A Detrending Interpretation of Regressions 12-3a A t Test for AR(1) Serial Correlation with
with a Time Trend 356 Strictly Exogenous Regressors 402
10-5d Computing R-Squared When the Dependent 12-3b The Durbin-Watson Test under Classical
Variable Is Trending 357 Assumptions 403
10-5e Seasonality 358 12-3c Testing for AR(1) Serial Correlation without
Summary 360 Strictly Exogenous Regressors 404
Key Terms 361 12-3d Testing for Higher-Order Serial Correlation 406

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 viii Contents

12-4 Correcting for Serial Correlation with Strictly Summary 451

Exogenous Regressors 407 Key Terms 452
12-4a Obtaining the Best Linear Unbiased
Problems 452
Estimator in the AR(1) Model 408
Computer Exercises 453
12-4b Feasible GLS Estimation with AR(1)
Errors 409
12-4c Comparing OLS and FGLS 411 chapter 14 Advanced Panel
12-4d Correcting for Higher-Order Serial Data Methods 462
Correlation 413
12-4e What if the Serial Correlation Model Is 14-1 Fixed Effects Estimation 463
Wrong? 413 14-1a The Dummy Variable Regression 466
12-5 Differencing and Serial Correlation 414 14-1b Fixed Effects or First Differencing? 467
14-1c Fixed Effects with Unbalanced Panels 468
12-6 Heteroskedasticity in Time Series
Regressions 415 14-2 Random Effects Models 469
12-6a Heteroskedasticity-Robust Statistics 416 14-2a Random Effects or Pooled OLS? 473
12-6b Testing for Heteroskedasticity 416 14-2b Random Effects or Fixed Effects? 473
12-6c Autoregressive Conditional 14-3 The Correlated Random Effects Approach 474
Heteroskedasticity 417 14-3a Unbalanced Panels 476
12-6d Heteroskedasticity and Serial Correlation in 14-4 General Policy Analysis with Panel Data 477
Regression Models 418 14-4a Advanced Considerations with Policy
Summary 419 Analysis 478
Key Terms 420 14-5 Applying Panel Data Methods to Other Data
Problems 420 Structures 480
Computer Exercises 421 Summary 483
Key Terms 484
Part 3 Problems 484
Computer Exercises 486
Advanced Topics 425
chapter 15 Instrumental Variables Estimation
chapter 13 Pooling Cross Sections across and Two-Stage Least Squares 495
Time: Simple Panel Data Methods 426
15-1 Motivation: Omitted Variables in a Simple
Regression Model 496
13-1 Pooling Independent Cross Sections across
Time 427 15-1a Statistical Inference with the IV
Estimator 500
13-1a The Chow Test for Structural Change across
Time 431 15-1b Properties of IV with a Poor Instrumental
Variable 503
13-2 Policy Analysis with Pooled Cross Sections 431
15-1c Computing R-Squared after IV Estimation 505
13-2a Adding an Additional Control Group 436 15-2 IV Estimation of the Multiple Regression
13-2b A General Framework for Policy Analysis Model 505
with Pooled Cross Sections 437
15-3 Two-Stage Least Squares 509
13-3 Two-Period Panel Data Analysis 439 15-3a A Single Endogenous Explanatory
13-3a Organizing Panel Data 444 Variable 509
13-4 Policy Analysis with Two-Period Panel 15-3b Multicollinearity and 2SLS 511
Data 444 15-3c Detecting Weak Instruments 512
13-5 Differencing with More Than Two Time 15-3d Multiple Endogenous Explanatory
Periods 447 Variables 513
13-5a Potential Pitfalls in First Differencing Panel 15-3e Testing Multiple Hypotheses after 2SLS
Data 451 Estimation 513

58860_fm_hr_i-xxii.indd 8 10/23/18 6:11 PM

 Contents ix

15-4 IV Solutions to Errors-in-Variables Problems 514 17-2 The Tobit Model for Corner Solution
15-5 Testing for Endogeneity and Testing Overidentifying Responses 571
Restrictions 515 17-2a Interpreting the Tobit Estimates 572
15-5a Testing for Endogeneity 515 17-2b Specification Issues in Tobit Models 578
15-5b Testing Overidentification Restrictions 516 17-3 The Poisson Regression Model 578
15-6 2SLS with Heteroskedasticity 518 17-4 Censored and Truncated Regression Models 582
15-7 Applying 2SLS to Time Series Equations 519 17-4a Censored Regression Models 583
15-8 Applying 2SLS to Pooled Cross Sections 17-4b Truncated Regression Models 586
and Panel Data 521 17-5 Sample Selection Corrections 588
Summary 522 17-5a When Is OLS on the Selected Sample
Consistent? 588
Key Terms 523
17-5b Incidental Truncation 589
Problems 523
Summary 593
Computer Exercises 526
Key Terms 593
Problems 594
Simultaneous Equations
chapter 16
Computer Exercises 596
Models 534
16-1 The Nature of Simultaneous Equations chapter 18 Advanced Time Series Topics 604
Models 535
16-2 Simultaneity Bias in OLS 538 18-1 Infinite Distributed Lag Models 605
16-3 Identifying and Estimating a Structural 18-1a The Geometric (or Koyck) Distributed Lag
Equation 539 Model 607
16-3a Identification in a Two-Equation System 540 18-1b Rational Distributed Lag Models 608
16-3b Estimation by 2SLS 543 18-2 Testing for Unit Roots 610
16-4 Systems with More Than Two Equations 545 18-3 Spurious Regression 614
16-4a Identification in Systems with Three or More 18-4 Cointegration and Error Correction Models 616
Equations 545 18-4a Cointegration 616
16-4b Estimation 546 18-4b Error Correction Models 620
16-5 Simultaneous Equations Models with Time 18-5 Forecasting 622
Series 546
18-5a Types of Regression Models Used for
16-6 Simultaneous Equations Models with Panel Forecasting 623
Data 549 18-5b One-Step-Ahead Forecasting 624
Summary 551 18-5c Comparing One-Step-Ahead Forecasts 627
Key Terms 552 18-5d Multiple-Step-Ahead Forecasts 628
Problems 552 18-5e Forecasting Trending, Seasonal, and Integrated
Computer Exercises 555 Processes 631
Summary 635
chapter 17 Limited Dependent Variable Models Key Terms 636
and Sample Selection Corrections 559 Problems 636
Computer Exercises 638
17-1 Logit and Probit Models for Binary
Response 560
17-1a Specifying Logit and Probit Models 560 chapter 19Carrying Out an Empirical
17-1b Maximum Likelihood Estimation of Logit and Project 642
Probit Models 563
17-1c Testing Multiple Hypotheses 564 19-1 Posing a Question 642
17-1d Interpreting the Logit and Probit Estimates 565 19-2 Literature Review 644

58860_fm_hr_i-xxii.indd 9 10/23/18 6:11 PM

 x Contents

19-3 Data Collection 645 B-2 Joint Distributions, Conditional Distributions,

19-3a Deciding on the Appropriate Data Set 645 and Independence 688
19-3b Entering and Storing Your Data 646 B-2a Joint Distributions and Independence 688
19-3c Inspecting, Cleaning, and Summarizing Your B-2b Conditional Distributions 690
Data 647 B-3 Features of Probability Distributions 691
19-4 Econometric Analysis 648 B-3a A Measure of Central Tendency: The Expected
19-5 Writing an Empirical Paper 651 Value 691
19-5a Introduction 651 B-3b Properties of Expected Values 692
19-5b Conceptual (or Theoretical) B-3c Another Measure of Central Tendency: The
Framework 652 Median 694
19-5c Econometric Models and Estimation B-3d Measures of Variability: Variance and Standard
Methods 652 Deviation 695
19-5d The Data 654 B-3e Variance 695
19-5e Results 655 B-3f Standard Deviation 696
19.5f Conclusions 656 B-3g Standardizing a Random Variable 696
19-5g Style Hints 656 B-3h Skewness and Kurtosis 697
Summary 658 B-4 Features of Joint and Conditional
Distributions 697
Key Terms 658
B-4a Measures of Association: Covariance and
Sample Empirical Projects 658 Correlation 697
List of Journals 664 B-4b Covariance 697
Data Sources 665 B-4c Correlation Coefficient 698
B-4d Variance of Sums of Random Variables 699
Math Refresher A  Basic Mathematical B-4e Conditional Expectation 700
Tools 666 B-4f Properties of Conditional Expectation 702
B-4g Conditional Variance 704
A-1 The Summation Operator and Descriptive B-5 The Normal and Related Distributions 704
Statistics 666 B-5a The Normal Distribution 704
A-2 Properties of Linear Functions 668 B-5b The Standard Normal Distribution 705
A-3 Proportions and Percentages 671 B-5c Additional Properties of the Normal
A-4 Some Special Functions and Their Distribution 707
Properties 672 B-5d The Chi-Square Distribution 708
A-4a Quadratic Functions 672 B-5e The t Distribution 708
A-4b The Natural Logarithm 674 B-5f The F Distribution 709
A-4c The Exponential Function 677 Summary 711
A-5 Differential Calculus 678 Key Terms 711
Summary 680 Problems 711
Key Terms 681
Problems 681 Math Refresher C  Fundamentals of
Mathematical Statistics 714
Math Refresher B Fundamentals of
Probability 684 C-1 Populations, Parameters, and Random
Sampling 714
B-1 Random Variables and Their Probability C-1a Sampling 714
Distributions 684 C-2 Finite Sample Properties of Estimators 715
B-1a Discrete Random Variables 685 C-2a Estimators and Estimates 715
B-1b Continuous Random Variables 687 C-2b Unbiasedness 716

58860_fm_hr_i-xxii.indd 10 10/23/18 6:11 PM

 Contents xi

C-2c The Sampling Variance of Estimators 718 D-2e Partitioned Matrix Multiplication 752
C-2d Efficiency 719 D-2f Trace 753
C-3 Asymptotic or Large Sample Properties of D-2g Inverse 753
Estimators 721 D-3 Linear Independence and Rank of a
C-3a Consistency 721 Matrix 754
C-3b Asymptotic Normality 723 D-4 Quadratic Forms and Positive Definite
C-4 General Approaches to Parameter Estimation 724 Matrices 754
C-4a Method of Moments 725 D-5 Idempotent Matrices 755
C-4b Maximum Likelihood 725 D-6 Differentiation of Linear and Quadratic
C-4c Least Squares 726 Forms 755
C-5 Interval Estimation and Confidence Intervals 727 D-7 Moments and Distributions of Random
C-5a The Nature of Interval Estimation 727 Vectors 756
C-5b Confidence Intervals for the Mean from a Normally D-7a Expected Value 756
Distributed Population 729 D-7b Variance-Covariance Matrix 756
C-5c A Simple Rule of Thumb for a 95% Confidence D-7c Multivariate Normal Distribution 756
Interval 731 D-7d Chi-Square Distribution 757
C-5d Asymptotic Confidence Intervals for Nonnormal D-7e t Distribution 757
Populations 732 D-7f F Distribution 757
C-6 Hypothesis Testing 733 Summary 757
C-6a Fundamentals of Hypothesis Testing 733
Key Terms 757
C-6b Testing Hypotheses about the Mean in a Normal
Problems 758
Population 735
C-6c Asymptotic Tests for Nonnormal
Populations 738
Advanced Treatment E  The Linear Regression
C-6d Computing and Using p-Values 738 Model in Matrix Form 760
C-6e The Relationship between Confidence Intervals
and Hypothesis Testing 741 E-1 The Model and Ordinary Least
Squares Estimation 760
C-6f Practical versus Statistical Significance 742
E-1a The Frisch-Waugh Theorem 762
C-7 Remarks on Notation 743
E-2 Finite Sample Properties of OLS 763
Summary 743
E-3 Statistical Inference 767
Key Terms 744
E-4 Some Asymptotic Analysis 769
Problems 744 E-4a Wald Statistics for Testing Multiple
Hypotheses 771
Advanced Treatment D  Summary of Matrix Summary 771
Algebra 749 Key Terms 771
Problems 772
D-1 Basic Definitions 749
Answers to Going Further Questions 775
D-2 Matrix Operations 750
D-2a Matrix Addition 750 Statistical Tables 784
D-2b Scalar Multiplication 750 References 791
D-2c Matrix Multiplication 751 Glossary 797
D-2d Transpose 752 Index 812

58860_fm_hr_i-xxii.indd 11 10/23/18 6:11 PM

 Preface

In ALL content, please indent the first paragraph as well, like the following ones. My motivation
for writing the first edition of Introductory Econometrics: A Modern Approach was that I saw a fairly
wide gap between how econometrics is taught to undergraduates and how empirical researchers think
about and apply econometric methods. I became convinced that teaching introductory econometrics
from the perspective of professional users of econometrics would actually simplify the presentation,
in addition to making the subject much more interesting.
Based on the positive reactions to the several earlier editions, it appears that my hunch was correct.
Many instructors, having a variety of backgrounds and interests and teaching students with different
levels of preparation, have embraced the modern approach to econometrics espoused in this text. The
emphasis in this edition is still on applying econometrics to real-world problems. Each econometric
method is motivated by a particular issue facing researchers analyzing nonexperimental data. The focus
in the main text is on understanding and interpreting the assumptions in light of actual empirical appli-
cations: the mathematics required is no more than college algebra and basic probability and statistics.

Designed for Today’s Econometrics Course

The seventh edition preserves the overall organization of the sixth. The most noticeable feature
that distinguishes this text from most others is the separation of topics by the kind of data being ana-
lyzed. This is a clear departure from the traditional approach, which presents a linear model, lists all
assumptions that may be needed at some future point in the analysis, and then proves or asserts results
without clearly connecting them to the assumptions. My approach is first to treat, in Part 1, mul-
tiple regression analysis with cross-sectional data, under the assumption of random sampling. This
setting is natural to students because they are familiar with random sampling from a population in
their introductory statistics courses. Importantly, it allows us to distinguish assumptions made about
the underlying population regression model—assumptions that can be given economic or behavioral
­content—from assumptions about how the data were sampled. Discussions about the consequences of
nonrandom sampling can be treated in an intuitive fashion after the students have a good grasp of the
multiple regression model estimated using random samples.
An important feature of a modern approach is that the explanatory variables—along with the
dependent variable—are treated as outcomes of random variables. For the social sciences, allow-
ing random explanatory variables is much more realistic than the traditional assumption of nonran-
dom explanatory variables. As a nontrivial benefit, the population model/random sampling approach
reduces the number of assumptions that students must absorb and understand. Ironically, the classical
approach to regression analysis, which treats the explanatory variables as fixed in repeated samples
and is still pervasive in introductory texts, literally applies to data collected in an experimental setting.
In addition, the contortions required to state and explain assumptions can be confusing to students.
My focus on the population model emphasizes that the fundamental assumptions underlying
regression analysis, such as the zero mean assumption on the unobservable error term, are properly

xii

58860_fm_hr_i-xxii.indd 12 10/23/18 6:11 PM

 Preface xiii

stated conditional on the explanatory variables. This leads to a clear understanding of the kinds of
problems, such as heteroskedasticity (nonconstant variance), that can invalidate standard inference
procedures. By focusing on the population, I am also able to dispel several misconceptions that arise
in econometrics texts at all levels. For example, I explain why the usual R-squared is still valid as a
goodness-of-fit measure in the presence of heteroskedasticity (Chapter 8) or serially correlated errors
(Chapter 12); I provide a simple demonstration that tests for functional form should not be viewed
as general tests of omitted variables (Chapter 9); and I explain why one should always include in a
regression model extra control variables that are uncorrelated with the explanatory variable of inter-
est, which is often a key policy variable (Chapter 6).
Because the assumptions for cross-sectional analysis are relatively straightforward yet realis-
tic, students can get involved early with serious cross-sectional applications without having to worry
about the thorny issues of trends, seasonality, serial correlation, high persistence, and spurious regres-
sion that are ubiquitous in time series regression models. Initially, I figured that my treatment of
regression with cross-sectional data followed by regression with time series data would find favor
with instructors whose own research interests are in applied microeconomics, and that appears to be
the case. It has been gratifying that adopters of the text with an applied time series bent have been
equally enthusiastic about the structure of the text. By postponing the econometric analysis of time
series data, I am able to put proper focus on the potential pitfalls in analyzing time series data that do
not arise with cross-sectional data. In effect, time series econometrics finally gets the serious treat-
ment it deserves in an introductory text.
As in the earlier editions, I have consciously chosen topics that are important for reading journal
articles and for conducting basic empirical research. Within each topic, I have deliberately omitted
many tests and estimation procedures that, while traditionally included in textbooks, have not with-
stood the empirical test of time. Likewise, I have emphasized more recent topics that have clearly
demonstrated their usefulness, such as obtaining test statistics that are robust to heteroskedasticity
(or serial correlation) of unknown form, using multiple years of data for policy analysis, or solving
the omitted variable problem by instrumental variables methods. I appear to have made fairly good
choices, as I have received only a handful of suggestions for adding or deleting material.
I take a systematic approach throughout the text, by which I mean that each topic is presented by
building on the previous material in a logical fashion, and assumptions are introduced only as they
are needed to obtain a conclusion. For example, empirical researchers who use econometrics in their
research understand that not all of the Gauss-Markov assumptions are needed to show that the ordi-
nary least squares (OLS) estimators are unbiased. Yet the vast majority of econometrics texts intro-
duce a complete set of assumptions (many of which are redundant or in some cases even logically
conflicting) before proving the unbiasedness of OLS. Similarly, the normality assumption is often
included among the assumptions that are needed for the Gauss-Markov Theorem, even though it is
fairly well known that normality plays no role in showing that the OLS estimators are the best linear
unbiased estimators.
My systematic approach is illustrated by the order of assumptions that I use for multiple regres-
sion in Part 1. This structure results in a natural progression for briefly summarizing the role of each
assumption:
MLR.1: Introduce the population model and interpret the population parameters (which we hope
to estimate).
MLR.2: Introduce random sampling from the population and describe the data that we use to
estimate the population parameters.
MLR.3: Add the assumption on the explanatory variables that allows us to compute the estimates
from our sample; this is the so-called no perfect collinearity assumption.
MLR.4: Assume that, in the population, the mean of the unobservable error does not depend on the
values of the explanatory variables; this is the “mean independence” assumption combined with a
zero population mean for the error, and it is the key assumption that delivers unbiasedness of OLS.

58860_fm_hr_i-xxii.indd 13 10/23/18 6:11 PM

 xiv Preface

After introducing Assumptions MLR.1 to MLR.3, one can discuss the algebraic properties of ordi-
nary least squares—that is, the properties of OLS for a particular set of data. By adding Assumption
MLR.4, we can show that OLS is unbiased (and consistent). Assumption MLR.5 (homoskedastic-
ity) is added for the Gauss-Markov Theorem and for the usual OLS variance formulas to be valid.
Assumption MLR.6 (normality), which is not introduced until Chapter 4, is added to round out the
classical linear model assumptions. The six assumptions are used to obtain exact statistical inference
and to conclude that the OLS estimators have the smallest variances among all unbiased estimators.
I use parallel approaches when I turn to the study of large-sample properties and when I treat
regression for time series data in Part 2. The careful presentation and discussion of assumptions
makes it relatively easy to transition to Part 3, which covers advanced topics that include using pooled
cross-sectional data, exploiting panel data structures, and applying instrumental variables methods.
Generally, I have strived to provide a unified view of econometrics, where all estimators and test sta-
tistics are obtained using just a few intuitively reasonable principles of estimation and testing (which,
of course, also have rigorous justification). For example, regression-based tests for heteroskedasticity
and serial correlation are easy for students to grasp because they already have a solid understanding
of regression. This is in contrast to treatments that give a set of disjointed recipes for outdated econo-
metric testing procedures.
Throughout the text, I emphasize ceteris paribus relationships, which is why, after one chapter on
the simple regression model, I move to multiple regression analysis. The multiple regression setting
motivates students to think about serious applications early. I also give prominence to policy analysis
with all kinds of data structures. Practical topics, such as using proxy variables to obtain ceteris pari-
bus effects and interpreting partial effects in models with interaction terms, are covered in a simple
fashion.

Designed at Undergraduates, Applicable

to Master’s Students
The text is designed for undergraduate economics majors who have taken college algebra and
one-semester of introductory probability and statistics. (Math Refresher A, B, and C contain the
requisite background material.) A one-semester or one-quarter econometrics course would not be
expected to cover all, or even any, of the more advanced material in Part 3. A typical introduc-
tory course includes Chapters 1 through 8, which cover the basics of simple and multiple regres-
sion for cross-sectional data. Provided the emphasis is on intuition and interpreting the empirical
examples, the material from the first eight chapters should be accessible to undergraduates in most
economics departments. Most instructors will also want to cover at least parts of the c­ hapters
on regression analysis with time series data, Chapters 10 and 12, in varying degrees of depth.
In the one-semester course that I teach at Michigan State, I cover Chapter 10 fairly carefully,
give an overview of the material in Chapter 11, and cover the material on serial correlation in
Chapter 12. I find that this basic one-semester course puts students on a solid footing to write
empirical papers, such as a term paper, a senior seminar paper, or a senior thesis. Chapter 9
­c ontains more specialized topics that arise in analyzing cross-sectional data, including data
­problems such as outliers and nonrandom sampling; for a one-semester course, it can be skipped
without loss of continuity.
The structure of the text makes it ideal for a course with a cross-sectional or policy analysis
focus: the time series chapters can be skipped in lieu of topics from Chapters 9 or 15. The new mate-
rial on potential outcomes added to the first nine chapters should help the instructor craft a course
that provides an introduction to modern policy analysis. Chapter 13 is advanced only in the sense
that it treats two new data structures: independently pooled cross sections and two-period panel data
analysis. Such data structures are especially useful for policy analysis, and the chapter provides

58860_fm_hr_i-xxii.indd 14 10/23/18 6:11 PM

 Preface xv

several examples. Students with a good grasp of Chapters 1 through 8 will have little difficulty with
Chapter 13. Chapter 14 covers more advanced panel data methods and would probably be covered
only in a second course. A good way to end a course on cross-sectional methods is to cover the rudi-
ments of instrumental variables estimation in Chapter 15.
I have used selected material in Part 3, including Chapters 13 and 17, in a senior seminar geared
to producing a serious research paper. Along with the basic one-semester course, students who have
been exposed to basic panel data analysis, instrumental variables estimation, and limited dependent
variable models are in a position to read large segments of the applied social sciences literature.
Chapter 17 provides an introduction to the most common limited dependent variable models.
The text is also well suited for an introductory master’s level course, where the emphasis is on
applications rather than on derivations using matrix algebra. Several instructors have used the text to
teach policy analysis at the master’s level. For instructors wanting to present the material in matrix
form, Appendices D and E are self-contained treatments of the matrix algebra and the multiple regres-
sion model in matrix form.
At Michigan State, PhD students in many fields that require data analysis—including accounting,
agricultural economics, development economics, economics of education, finance, international eco-
nomics, labor economics, macroeconomics, political science, and public finance—have found the text
to be a useful bridge between the empirical work that they read and the more theoretical econometrics
they learn at the PhD level.

Suggestions for Designing Your Course Beyond the Basic

I have already commented on the contents of most of the chapters as well as possible outlines for
courses. Here I provide more specific comments about material in chapters that might be covered or
skipped:
Chapter 9 has some interesting examples (such as a wage regression that includes IQ score as
an explanatory variable). The rubric of proxy variables does not have to be formally introduced to
present these kinds of examples, and I typically do so when finishing up cross-sectional analysis. In
Chapter 12, for a one-semester course, I skip the material on serial correlation robust inference for
ordinary least squares as well as dynamic models of heteroskedasticity.
Even in a second course I tend to spend only a little time on Chapter 16, which covers simultane-
ous equations analysis. I have found that instructors differ widely in their opinions on the importance
of teaching simultaneous equations models to undergraduates. Some think this material is funda-
mental; others think it is rarely applicable. My own view is that simultaneous equations models are
overused (see Chapter 16 for a discussion). If one reads applications carefully, omitted variables and
measurement error are much more likely to be the reason one adopts instrumental variables estimation,
and this is why I use omitted variables to motivate instrumental variables estimation in Chapter 15.
Still, simultaneous equations models are indispensable for estimating demand and supply functions,
and they apply in some other important cases as well.
Chapter 17 is the only chapter that considers models inherently nonlinear in their parameters,
and this puts an extra burden on the student. The first material one should cover in this chapter is on
probit and logit models for binary response. My presentation of Tobit models and censored regression
still appears to be novel in introductory texts. I explicitly recognize that the Tobit model is applied to
corner solution outcomes on random samples, while censored regression is applied when the data col-
lection process censors the dependent variable at essentially arbitrary thresholds.
Chapter 18 covers some recent important topics from time series econometrics, including test-
ing for unit roots and cointegration. I cover this material only in a second-semester course at either
the undergraduate or master’s level. A fairly detailed introduction to forecasting is also included in
Chapter 18.

58860_fm_hr_i-xxii.indd 15 10/23/18 6:11 PM

 xvi Preface

Chapter 19, which would be added to the syllabus for a course that requires a term paper, is much
more extensive than similar chapters in other texts. It summarizes some of the methods appropriate
for various kinds of problems and data structures, points out potential pitfalls, explains in some detail
how to write a term paper in empirical economics, and includes suggestions for possible projects.

What’s Changed?
I have added new exercises to many chapters, including to the Math Refresher and Advanced
Treatment appendices. Some of the new computer exercises use new data sets, including a data set
on performance of men’s college basketball teams. I have also added more challenging problems that
require derivations.
There are several notable changes to the text. An important organizational change, which should
facilitate a wider variety of teaching tastes, is that the notion of binary, or dummy, explanatory vari-
ables is introduced in Chapter 2. There, it is shown that ordinary least squares estimation leads to a
staple in basic statistics: the difference in means between two subgroups in a population. By introduc-
ing qualitative factors into regression early on, the instructor is able to use a wider variety of empirical
examples from the very beginning.
The early discussion of binary explanatory variables allows for a formal introduction of potential,
or counterfactual, outcomes, which is indispensable in the modern literature on estimating causal
effects. The counterfactual approach to studying causality appears in previous editions, but Chapters 2,
3, 4, and 7 now explicitly include new sections on the modern approach to causal inference. Because
basic policy analysis involves the binary decision to participate in a program or not, a leading example
of using dummy independent variables in simple and multiple regression is to evaluate policy inter-
ventions. At the same time, the new material is incorporated into the text so that instructors not wish-
ing to cover the potential outcomes framework may easily skip the material. Several end-of-chapter
problems concern extensions of the basic potential outcomes framework, which should be valuable
for instructors wishing to cover that material.
Chapter 3 includes a new section on different ways that one can apply multiple regression,
including problems of pure prediction, testing efficient markets, and culminating with a discussion of
estimating treatment or causal effects. I think this section provides a nice way to organize students’
thinking about the scope of multiple regression after they have seen the mechanics of ordinary least
squares (OS) and several examples. As with other new material that touches on causal effects, this
material can be skipped without loss of continuity. A new section in Chapter 7 continues the discussion
of potential outcomes, allowing for nonconstant treatment effects. The material is a nice illustration
of estimating different regression functions for two subgroups from a population. New problems
in this chapter that allow the student more experience in using full regression adjustment to estimate
causal effects.
One notable change to Chapter 9 is a more detailed discussion of using missing data indicators
when data are missing on one or more of the explanatory variables. The assumptions underlying the
method are discussed in more detail than in the previous edition.
Chapter 12 has been reorganized to reflect a more modern treatment of the problem of serial
correlation in the errors of time series regression models. The new structure first covers adjusting the
OLS standard errors to allow general forms of serial correlation. Thus, the chapter outline now paral-
lels that in Chapter 8, with the emphasis in both cases on OLS estimation but making inference robust
to violation of standard assumptions. Correcting for serial correlation using generalized least squares
now comes after OLS and the treatment of testing for serial correlation.
The advanced chapters also include several improvements. Chapter 13 now discusses, at an acces-
sible level, extensions of the standard difference-in-differences setup, allowing for multiple control

58860_fm_hr_i-xxii.indd 16 10/23/18 6:11 PM

 Preface xvii

groups, multiple time periods, and even group-specific trends. In addition, the chapter includes a
more detailed discussion of computing standard errors robust to serial correlation when using first-
differencing estimation with panel data.
Chapter 14 now provides more detailed discussions of several important issues in estimating
panel data models by fixed effects, random effects, and correlated random effects (CRE). The CRE
approach with missing data is discussed in more detail, as is how one accounts for general functional
forms, such as squares and interactions, which are covered in the cross-sectional setting in Chapter 6.
An expanded section on general policy analysis with panel data should be useful for courses with an
emphasis on program interventions and policy evaluation.
Chapter 16, which still covers simultaneous equations models, now provides an explicit link
between the potential outcomes framework and specification of simultaneous equations models.
Chapter 17 now includes a discussion of using regression adjustment for estimating causal (treat-
ment) effects when the outcome variable has special features, such as when the outcome itself is a
binary variable. Then, as the reader is asked to explore in a new problem, logit and probit models can
be used to obtain more reliable estimates of average treatment effects by estimating separate models
for each treatment group.
Chapter 18 now provides more details about how one can compute a proper standard error for
a forecast (as opposed to a prediction) interval. This should help the advanced reader understand in
more detail the nature of the uncertainty in the forecast.

About MindTap™
MindTap is an outcome-driven application that propels students from memorization to mastery.
It’s the only platform that gives you complete ownership of your course. With it, you can challenge
every student, build their confidence, and empower them to be unstoppable.
Access Everything You Need In One Place. Cut down on prep with preloaded, organized course
materials in MindTap. Teach more efficiently with interactive multimedia, assignments, quizzes and
more. And give your students the power to read, listen and study on their phones, so they can learn on
their terms.
Empower Your Students To Reach Their Potential. Twelve distinct metrics give you actionable
insights into student engagement. Identify topics troubling your entire class and instantly communi-
cate with struggling students. And students can track their scores to stay motivated toward their goals.
Together, you can accelerate progress.
Your Course. Your Content. Only MindTap gives you complete control over your course. You
have the flexibility to reorder textbook chapters, add your own notes and embed a variety of content
including OER. Personalize course content to your students’ needs. They can even read your notes,
add their own and highlight key text to aid their progress.
A Dedicated Team, Whenever You Need Them. MindTap isn’t just a tool; it’s backed by a per-
sonalized team eager to support you. Get help setting up your course and tailoring it to your specific
objectives. You’ll be ready to make an impact from day one. And, we’ll be right here to help you and
your students throughout the semester—and beyond.

Design Features
In addition to the didactic material in the chapter, I have included two features to help students
better understand and apply what they are learning. Each chapter contains many numbered examples.
Several of these are case studies drawn from recently published papers. I have used my judgment to
simplify the analysis, hopefully without sacrificing the main point. The “Going Further Questions” in

58860_fm_hr_i-xxii.indd 17 10/23/18 6:11 PM

 xviii Preface

the chapter provide students an opportunity to “go further” in learning the material through analysis
or application. Students will find immediate feedback for these questions in the end of the text.
The end-of-chapter problems and computer exercises are heavily oriented toward empirical work,
rather than complicated derivations. The students are asked to reason carefully based on what they
have learned. The computer exercises often expand on the in-text examples. Several exercises use data
sets from published works or similar data sets that are motivated by published research in economics
and other fields.
A pioneering feature of this introductory econometrics text is the extensive glossary. The short
definitions and descriptions are a helpful refresher for students studying for exams or reading empiri-
cal research that uses econometric methods. I have added and updated several entries for the seventh
edition.

Instructional Tools
Cengage offers various supplements for instructors and students who use this book. I would like
to thank the Subject Matter Expert team who worked on these supplements and made teaching and
learning easy.

C. Patrick Scott, Ph.D., Louisiana Tech University (R Videos and Computer exercise reviewer)
Hisham Foad (Aplia Home work reviewer and Glossary)
Kenneth H. Brown, Missouri State University (R Videos creator)
Scott Kostyshak, University of Florida (R Videos reviewer)
Ujwal Kharel (Test Bank and Adaptive Test Prep)

Data Sets—Available in Six Formats

With more than 100 data sets in six different formats, including Stata®, R, EViews®, Minitab®,
Microsoft® Excel, and Text, the instructor has many options for problem sets, examples, and term
projects. Because most of the data sets come from actual research, some are very large. Except for
partial lists of data sets to illustrate the various data structures, the data sets are not reported in the
text. This book is geared to a course where computer work plays an integral role.

Updated Data Sets Handbook

An extensive data description manual is also available online. This manual contains a list of data
sources along with suggestions for ways to use the data sets that are not described in the text. This
unique handbook, created by author Jeffrey M. Wooldridge, lists the source of all data sets for quick
reference and how each might be used. Because the data book contains page numbers, it is easy to
see how the author used the data in the text. Students may want to view the descriptions of each data
set and it can help guide instructors in generating new homework exercises, exam problems, or term
projects. The author also provides suggestions on improving the data sets in this detailed resource that
is available on the book’s companion website at http://login.cengage.com and students can access it
free at www.cengage.com.

58860_fm_hr_i-xxii.indd 18 10/23/18 6:11 PM

 Preface xix

Instructor’s Manual with Solutions

REVISED INSTRUCTOR’S MANUAL WITH SOLUTIONS SAVES TIME IN PREPARATION
AND GRADING. The online Instructor’s Manual with solutions contains answers to all exercises in
this edition. Teaching tips provide suggestions for presenting each chapter’s material. The Instructor’s
Manual also contains sources for each of the data files with suggestions for using the data to develop
problem sets, exams, and term papers. The Instructor’s Manual is password-protected and available
for download on the book’s companion website.

Test Bank
Cengage Testing, powered by Cognero® is a flexible, online system that allows you to import,
edit, and manipulate content from the text’s test bank or elsewhere, including your own favorite test
questions; create multiple test versions in an instant; and deliver tests from your LMS, your class-
room, or wherever you want.

PowerPoint Slides
UPDATED POWERPOINT ® SLIDES BRING LECTURES TO LIFE WHILE VISUALLY
CLARIFYING CONCEPTS. Exceptional PowerPoint® presentation slides, created specifically for
this edition, help you create engaging, memorable lectures. The slides are particularly useful for clari-
fying advanced topics in Part 3. You can modify or customize the slides for your specific course.
PowerPoint® slides are available for convenient download on the instructor-only, password-protected
section of the book’s companion website.

Scientific Word Slides

UPDATED SCIENTIFIC WORD® SLIDES REINFORCE TEXT CONCEPTS AND LECTURE
PRESENTATIONS. Created by the text author, this edition’s Scientific Word ® slides reinforce the
book’s presentation slides while highlighting the benefits of Scientific Word®, the application cre-
ated by MacKichan software, Inc. for specifically composing mathematical, scientific and techni-
cal documents using LaTeX typesetting. These slides are based on the author’s actual lectures and
are available for convenient download on the password-protected section of the book’s companion
website.

Student Supplements
Student Solutions Manual
Now your student’s can maximize their study time and further their course success with this dynamic
online resource. This helpful Solutions Manual includes detailed steps and solutions to odd-numbered
problems as well as computer exercises in the text. This supplement is available as a free resource at
www.cengagebrain.com.

58860_fm_hr_i-xxii.indd 19 10/23/18 6:11 PM

 xx Preface

Acknowledgments
I would like to thank those who reviewed and provided helpful comments for this and previous
­editions of the text:
Erica Johnson, Gonzaga University Steven Cuellar, Sonoma State
University
Mary Ellen Benedict, Bowling Green
State University Yanan Di, Wagner College
Chirok Han, Korea University John Fitzgerald, Bowdoin College
Yan Li, Temple University Philip N. Jefferson, Swarthmore
College
Melissa Tartari, Yale University
Yongsheng Wang, Washington and
Michael Allgrunn, University of Jefferson College
South Dakota
Sheng-Kai Chang, National Taiwan
Gregory Colman, Pace University University
Yoo-Mi Chin, Missouri University of Damayanti Ghosh, Binghamton
Science and Technology University
Arsen Melkumian, Western Illinois Susan Averett, Lafayette College
University
Kevin J. Mumford, Purdue
Kevin J. Murphy, Oakland University
University
Kristine Grimsrud, University of New
Nicolai V. Kuminoff, Arizona State
Mexico
University
Will Melick, Kenyon College
Subarna K. Samanta, The College of
Philip H. Brown, Colby College New Jersey
Argun Saatcioglu, University of Jing Li, South Dakota State
Kansas University
Ken Brown, University of Northern Gary Wagner, University of
Iowa Arkansas–Little Rock
Michael R. Jonas, University of San Kelly Cobourn, Boise State University
Francisco
Timothy Dittmer, Central
Melissa Yeoh, Berry College Washington University
Nikolaos Papanikolaou, SUNY at Daniel Fischmar, Westminster
New Paltz College
Konstantin Golyaev, University of Subha Mani, Fordham University
Minnesota
John Maluccio, Middlebury College
Soren Hauge, Ripon College
James Warner, College of Wooster
Kevin Williams, University of
Christopher Magee, Bucknell
Minnesota
University
Hailong Qian, Saint Louis
University Andrew Ewing, Eckerd College

Rod Hissong, University of Texas at Debra Israel, Indiana State

Arlington University

58860_fm_hr_i-xxii.indd 20 10/23/18 6:11 PM

 Preface xxi

Jay Goodliffe, Brigham Young Heather O’Neill, Ursinus College

University
Leslie Papke, Michigan State
Stanley R. Thompson, The Ohio University
State University
Timothy Vogelsang, Michigan State
Michael Robinson, Mount Holyoke University
College
Stephen Woodbury, Michigan State
Ivan Jeliazkov, University of University
California, Irvine
Some of the changes I discussed earlier were driven by comments I received from people on this
list, and I continue to mull over other specific suggestions made by one or more reviewers.
Many students and teaching assistants, too numerous to list, have caught mistakes in earlier
­editions or have suggested rewording some paragraphs. I am grateful to them.
As always, it was a pleasure working with the team at Cengage Learning. Michael Parthenakis,
my longtime Product Manager, has learned very well how to guide me with a firm yet gentle hand.
Anita Verma and Ethan Crist quickly mastered the difficult challenges of being the content and sub-
ject matter expert team of a dense, technical textbook. Their careful reading of the manuscript and
fine eye for detail have improved this seventh ­edition considerably.
This book is dedicated to my family: Leslie, Edmund, and R.G.
Jeffrey M. Wooldridge

58860_fm_hr_i-xxii.indd 21 10/23/18 6:11 PM

 About the Author

Jeffrey M. Wooldridge is University Distinguished Professor of Economics at Michigan State

University, where he has taught since 1991. From 1986 to 1991, he was an assistant professor of eco-
nomics at the Massachusetts Institute of Technology. He received his bachelor of arts, with majors in
computer science and economics, from the University of California, Berkeley, in 1982, and received
his doctorate in economics in 1986 from the University of California, San Diego. He has published
more than 60 articles in internationally recognized journals, as well as several book chapters. He
is also the author of Econometric Analysis of Cross Section and Panel Data, second edition. His
awards include an Alfred P. Sloan Research Fellowship, the Plura Scripsit award from Econometric
Theory, the Sir Richard Stone prize from the Journal of Applied Econometrics, and three graduate
teacher-of-the-year awards from MIT. He is a fellow of the Econometric Society and of the Journal
of Econometrics. He is past editor of the Journal of Business and Economic Statistics, and past
econometrics coeditor of Economics Letters. He has served on the editorial boards of Econometric
Theory, the Journal of Economic Literature, the Journal of Econometrics, the Review of Economics
and Statistics, and the Stata Journal. He has also acted as an occasional econometrics consultant for
Arthur Andersen, Charles River Associates, the Washington State Institute for Public Policy, Stratus
Consulting, and Industrial Economics, Incorporated.

xxii

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 chapter 1
The Nature
of Econometrics
and Economic Data

C
hapter 1 discusses the scope of econometrics and raises general issues that arise in the
application of econometric methods. Section 1-1 provides a brief discussion about the pur-
pose and scope of econometrics and how it fits into economic analysis. Section 1-2 provides
examples of how one can start with an economic theory and build a model that can be estimated
using data. Section 1-3 examines the kinds of data sets that are used in business, economics, and
other social sciences. Section 1-4 provides an intuitive discussion of the difficulties associated with
­inferring ­causality in the social sciences.

1-1 What Is Econometrics?

Imagine that you are hired by your state government to evaluate the effectiveness of a publicly
funded job training program. Suppose this program teaches workers various ways to use computers in
the manufacturing process. The 20-week program offers courses during nonworking hours. Any
hourly manufacturing worker may participate, and enrollment in all or part of the program is volun-
tary. You are to determine what, if any, effect the training program has on each worker’s subsequent
hourly wage.
Now, suppose you work for an investment bank. You are to study the returns on different invest-
ment strategies involving short-term U.S. treasury bills to decide whether they comply with implied
economic theories.
The task of answering such questions may seem daunting at first. At this point, you may only
have a vague idea of the kind of data you would need to collect. By the end of this introductory
econometrics course, you should know how to use econometric methods to formally evaluate a job
training program or to test a simple economic theory.
1

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 2 CHAPTER 1 The Nature of Econometrics and Economic Data

Econometrics is based upon the development of statistical methods for estimating economic
relationships, testing economic theories, and evaluating and implementing government and business
policy. A common application of econometrics is the forecasting of such important macroeconomic
variables as interest rates, inflation rates, and gross domestic product (GDP). Whereas forecasts of
economic indicators are highly visible and often widely published, econometric methods can be used
in economic areas that have nothing to do with macroeconomic forecasting. For example, we will
study the effects of political campaign expenditures on voting outcomes. We will consider the effect
of school spending on student performance in the field of education. In addition, we will learn how to
use econometric methods for forecasting economic time series.
Econometrics has evolved as a separate discipline from mathematical statistics because the for-
mer focuses on the problems inherent in collecting and analyzing nonexperimental economic data.
Nonexperimental data are not accumulated through controlled experiments on individuals, firms,
or segments of the economy. (Nonexperimental data are sometimes called observational data, or
retrospective data, to emphasize the fact that the researcher is a passive collector of the data.)
Experimental data are often collected in laboratory environments in the natural sciences, but
they are more difficult to obtain in the social sciences. Although some social experiments can be
devised, it is often impossible, prohibitively expensive, or morally repugnant to conduct the kinds
of controlled experiments that would be needed to address economic issues. We give some specific
examples of the differences between experimental and nonexperimental data in Section 1-4.
Naturally, econometricians have borrowed from mathematical statisticians whenever possible.
The method of multiple regression analysis is the mainstay in both fields, but its focus and interpreta-
tion can differ markedly. In addition, economists have devised new techniques to deal with the com-
plexities of economic data and to test the predictions of economic theories.

1-2 Steps in Empirical Economic Analysis

Econometric methods are relevant in virtually every branch of applied economics. They come into
play either when we have an economic theory to test or when we have a relationship in mind that has
some importance for business decisions or policy analysis. An empirical analysis uses data to test a
theory or to estimate a relationship.
How does one go about structuring an empirical economic analysis? It may seem obvious, but
it is worth emphasizing that the first step in any empirical analysis is the careful formulation of the
question of interest. The question might deal with testing a certain aspect of an economic theory, or it
might pertain to testing the effects of a government policy. In principle, econometric methods can be
used to answer a wide range of questions.
In some cases, especially those that involve the testing of economic theories, a formal economic
model is constructed. An economic model consists of mathematical equations that describe various
relationships. Economists are well known for their building of models to describe a vast array of
behaviors. For example, in intermediate microeconomics, individual consumption decisions, subject
to a budget constraint, are described by mathematical models. The basic premise underlying these
models is utility maximization. The assumption that individuals make choices to maximize their
well-being, subject to resource constraints, gives us a very powerful framework for creating tractable
economic models and making clear predictions. In the context of consumption decisions, utility maxi-
mization leads to a set of demand equations. In a demand equation, the quantity demanded of each
commodity depends on the price of the goods, the price of substitute and complementary goods, the
consumer’s income, and the individual’s characteristics that affect taste. These equations can form the
basis of an econometric analysis of consumer demand.
Economists have used basic economic tools, such as the utility maximization framework, to
explain behaviors that at first glance may appear to be noneconomic in nature. A classic example is
Becker’s (1968) economic model of criminal behavior.

58860_ch01_hr_001-018.indd 2 10/18/18 4:04 PM

Another Random Scribd Document
with Unrelated Content
Tacitus, in recording the speech of Germanicus to his troops before
the battle at Idistavisus, bears witness to the uncivilised character of
the inhabitants of the country.

“The huge targets, the enormous spears of the barbarians could

never be wielded against trunks of trees and thickets of underwood
shooting up from the ground, like Roman swords and javelins, and
armour fitting the body ... the Germans had neither helmet nor coat
of mail; their bucklers were not even strengthened with leather, but
mere contextures of twigs and boards of no substance daubed over
with paint. Their first rank was to a certain extent armed with pikes,
the rest had only stakes burnt at the ends or short darts.”[16]

Now compare these descriptions with the magnificent archæology of

the North of that period—as seen in these volumes—from which we
learn that the tribes who inhabited the shores of the Baltic and the
present Scandinavia had at the time the above was written reached
a high degree of civilisation. We find in their graves and hoards,
coins of the early Roman Empire not in isolated instances, but
constantly and in large numbers, and deposited side by side with
such objects as coats of mail, damascened swords and other
examples of articles of highly artistic workmanship.
Three kinds of swords are often mentioned by the Northmen—the
mœkir, the sverd, and the sax, while among the spears there is one
called frakki, or frakka.
The double-edged sword was the one that was in use among the
Romans, and they, seeing bodies of men carrying a weapon unlike
theirs—single-edged, and called Sax—may have named them after
it, and the Franks, in like manner, may have been called after their
favourite weapon, the Frakki; but we see that neither the sax nor
the frakki was confined to one tribe in the North. There is a Saxland
in the Sagas—a small country situated east of the peninsula of
Jutland, about the present Holstein—a land tributary to the Danish
or Swedish Kings from the earliest times, but far from possessing the
warlike archæology of the North, it appears to have held an
insignificant place among the neighbouring tribes.
In the Bayeux tapestry the followers of William the Conqueror were
called Franci, and they always have been recognised as coming from
the North.
The very early finds prove that the Sax was not rare, for it occurs in
different parts of the North and islands of the Baltic. The different
swords and spears used were so common and so well known to
everybody, that we have no special description of them in the Sagas,
except of their ornamentation; but in the Saga of Grettir there is a
passage which shows that the Sax was single-edged.
Gretti went to a farm in Iceland to slay the Bondi Thorbjorn and his
son Arnor. We read—

“When Gretti saw that the young man was within reach he lifted his
sax high into the air, and struck Arnor’s head with its back, so that
his head was broken and he died. Thereupon he killed the father
with his sax.”

Whatever may be the origin of local names employed by the Roman

writers we must look to the North for the maritime tribes described
by them; there we shall find the home of the earlier English people,
to whose numerous warlike and ocean-loving instincts we owe the
transformation which took place in Britain, and the glorious
inheritance which they have left to their descendants, scattered over
many parts of the world, in whom we recognise to this day many of
the very same traits of character which their ancestors possessed.
 CHAPTER III.
THE SETTLEMENT OF BRITAIN BY NORTHMEN.

The Notitia—Probable origin of the name England—Jutland—The

language of the North and of England—Early Northern kings in
England—Danes and Sueones—Mythical accounts of the
settlements of England.

Britain being an island could only be settled or conquered by

seafaring tribes, just in the same way as to-day distant lands can
only be conquered by nations possessing ships. From the Roman
writers we have the only knowledge we possess in regard to the
tribes inhabiting the country to which they gave the vague name of
Germania. From the Roman records we find that these tribes were
not civilised and that they were not a seafaring people.
Unfortunately the Roman accounts we have of their conquest and
occupation of Britain, of its population and inhabitants, are very
meagre and unsatisfactory, and do not help us much to ascertain
how the settlement in Britain by the people of the North began. Our
lack of information is most probably due to the simple reason that
the settlement, like all settlements of a new country, was a very
gradual one, a few men coming over in the first instance for the
purpose of trade either with Britons or Romans, or coming from the
over-populated North to settle in a country which the paucity of
archæological remains shows to have been thinly occupied. The
Romans made no objection to these new settlers, who did not prove
dangerous to their power on the island, but brought them
commodities, such as furs, &c., from the North.
We find from the Roman records that the so-called Saxons had
founded colonies or had settlements in Belgium and Gaul.
Another important fact we know from the records relating to Britain
is that during the Roman occupation of the island the Saxons had
settlements in the country; but how they came hither we are not
told.
In the Notitia Dignitatum utriusque imperii, a sort of catalogue or
“Army List,” compiled towards the latter end of the fourth century,
occurs the expression, “Comes litoris Saxonici per Britannias”—Count
of the Saxon Shore in Britain. Within this litus Saxonicum the
following places are mentioned:—Othona, said to be “close by
Hastings”; Dubris, said to be Dover; Rutupiæ, Richborough;
Branodunum, Brancaster; Regulbium, Reculvers; Lemannis, West
Hythe; Garianno, Yarmouth; Anderida, Pevensey; Portus Adurni,
Shoreham or Brighton.
This shows that the so-called Saxons were settled in Britain before
the Notitia was drawn up, and at a date very much earlier than has
been assigned by some modern historians.
The hypothesis that the expression “litus Saxonicum” is derived from
the enemy to whose ravages it was exposed seems improbable. Is it
not much more probable that the “litus Saxonicum per Britannias”
must mean the shore of the country settled, not attacked, by
Saxons? The mere fact of their attacking the shore would not have
given rise to the name applied to it had they not settled there, for I
maintain that there is no instance in the whole of Roman literature
of a country being named after the people who attacked it. If, on the
other hand, the Saxons had landed and formed settlements on the
British coasts, the origin of the name “Litus Saxonicum” is easily
understood.
Some time after the Romans relinquished Britain we find that part of
the island becomes known as England; and, to make the subject still
more confusing, the people composing its chief population are called
Saxons by the chroniclers and later historians, the name given to
them by the Romans.
That the history of the people called Saxons was by no means
certain is seen in the fact that Witikind, a monk of the tenth century,
gives the following account of what was then considered to be their
origin[17]:—

“On this there are various opinions, some thinking that the Saxons
had their origin from the Danes and Northmen; others, as I heard
some one maintain when a young man, that they are derived from
the Greeks, because they themselves used to say the Saxons were
the remnant of the Macedonian army, which, having followed
Alexander the Great, were by his premature death dispersed all over
the world.”

As to how Britain came to be called England the different legends

given by the monkish writers are contradictory.
The Skjöldunga Saga, which is often mentioned in other Sagas, and
which contains a record down to the early kings of Denmark, is
unfortunately lost: it would, no doubt, have thrown great light on
the lives of early chiefs who settled in Britain; but from some
fragments which are given in this work, and which are supposed to
belong to it, we see that several Danish and Swedish kings claimed
to have possessions in England long before the supposed coming of
the Danes.
Some writers assert that the new settlers gave to their new home in
Britain the name of the country which they had left, called Angeln,
and which they claim to be situated in the southern part of Jutland;
but besides the Angeln in Jutland there is in the Cattegat an
Engelholm, which is geographically far more important, situated in
the land known as the Vikin of the Sagas, a great Viking and warlike
land, from which the name Viking may have been derived, filled with
graves and antiquities of the iron age. There are also other Engeln in
the present Sweden.
In the whole literature of the North such a name as Engeln is
unknown; it may have been, perhaps, a local name.
In the Sagas the term England was applied to a portion only of
Britain, the inhabitants of which were called Englar, Enskirmenn.
Britain itself is called Bretland, and the people Bretar.

“Öngulsey (Angelsey) is one third of Bretland (Wales)” (Magnus

Barefoot’s Saga, c. 11).

Another part of the country was called Nordimbraland.

It is an important fact that throughout the Saga literature describing
the expeditions of the Northmen to England not a single instance is
mentioned of their coming in contact with a people called Saxons,
which shows that such a name in Britain was unknown to the people
of the North. Nor is any part of England called Saxland.
To make the confusion greater than it is, some modern historians
make the so-called Saxons, who were supposed to have come over
with the mythical Hengist and others, a distinct race from the
Northmen, who afterwards continued to land in the country.
In the Sagas we constantly find that the people of England are not
only included among the Northern lands, but that the warriors of
one country are helping the other. In several places we find, and
from others we infer, that the language in both countries was very
similar.

“All sayings in the Northern (norræn) tongue in which there is truth

begin when the Tyrkir and the Asia-men settled in the North. For it is
truly told that the tongue which we call Norræn came with them to
the North, and it went through Saxland, Denmark, Sweden, Norway,
and part of England” (Rimbegla, iii. c. i.).

“We are of one tongue, though one of the two, or in some respects
both, are now much changed” (Prose Edda, ii.)

“Then ruled over England King Ethelred, son of Edgar (979). He was
a good chief; he sat this winter in London. The tongue in England,
as well as in Norway and Denmark, was then one, but it changed in
England when William the Bastard won England. Thenceforth the
tongue of Valland (France) was used in England, for he (William)
was born there” (Gunnlaug Ormstunga’s Saga, c. 7).

That the language of the North should have taken a footing in a

great part of England is due, no doubt, to the continuous flow of
immigration, from the northern mother country, which entirely
swamped the former native or British element.
The story given in the English or Irish chronicles of the appearance
of the Danes, in A.D. 785, when their name is first mentioned, is as
little trustworthy as that of the settlement of England, and bears the
appearance of contradiction and confusion in regard to names of
people and facts.
We must remember that the Sueones are not mentioned from the
time of Tacitus to that of Charlemagne (772–814), and certainly they
had not disappeared in the meantime.
What were the Danes doing with their mighty fleets before this? Had
their ships been lying in port for centuries? Had they been built for
simple recreation and the pleasure of looking at them, or did their
maritime power arise at once as if by magic? Such an hypothesis
cannot stand the test of reasoning. The turning of a population into
a seafaring nation is the work of time. Where in the history of the
world can we find a parallel to this story of a people suddenly
appearing with immense navies? Let us compare by analogy the
statement of the chronicles with what might happen to the history of
England in the course of time.
Suppose that for some reason the previous history of England were
lost, with the exception of a fragment which spoke of her enormous
fleet of to-day. Could it be reasonably supposed that this great
maritime power was the creation of a few years?
A few years after the time fixed as that of their first supposed
appearance we find these very Danes swarming everywhere with
their fleets and warriors, not only in England, but in Gaul, in Brittany,
up the Seine, the Garonne, the Rhine, the Elbe, on the coasts of
Spain, and further eastward in the Mediterranean.
The Sueones, or Swedes, reappear at the close of the eighth and
commencement of the ninth centuries by the side of the Danes, and
both called themselves Northmen. Surely the maritime power of the
Sueones, described by Tacitus, could not have been destroyed
immediately after his death, only to reappear in the time of
Charlemagne, when it again becomes prominent in the Frankish
annals.
A remarkable fact not to be overlooked is that, in the time of
Charlemagne, the Franks and Saxons were not a seafaring people,
though their countries had an extensive coast with deep rivers. The
Frankish annals never mention a Frank or Saxon fleet attacking the
fleets of the Northmen, or preventing them from ascending their
streams, though Charlemagne ordered ships to be built in order to
resist their incursions.
While the country of the Saxons was being conquered by this
Emperor, we find that the Saxons themselves had no vessels on the
Elbe or Weser in which, if defeated, they could retire in safety, or by
help of which they could prevent the army of their enemies from
crossing their streams. Such tactics were constantly used by the
Northmen in their invasions of ancient Gaul, Britain, Germania,
Spain, &c.
Thus we see that, though hardly more than three hundred years had
elapsed since the time when, according to the Roman writers, the
fleets of the Franks and Saxons swarmed over every sea of Europe,
not a vestige of their former maritime power remained in the time of
Charlemagne, and the Saxons were still occupying the same country
as in the days of Ptolemy.
Pondering over the above important facts, the question arises: Were
not the Romans mistaken in giving the names of Saxons and Franks
to the maritime tribes of whose origin, country, and homes they
knew nothing, but who came to attack their shores? Were not these
so-called Saxons and Franks in reality tribes of Sueones, Swedes,
Danes, Norwegians? The Romans knew none of the countries of
these people. It seems strange, if not incredible, to find two peoples,
whose country had a vast sea-coast and deep rivers, totally
abandoning the seafaring habits possessed by their forefathers.
It cannot be doubted that Ivar Vidfadmi, after him Harald Hilditönn,
then Sigurd Hring and Ragnar Lodbrok and his sons, and probably
some of the Danish and Swedish kings before them, made
expeditions to England, and gained and held possessions there.
Several distinct records, having no connection with each other, being
parts of different Sagas and histories, with the archæology, form the
evidence.

“Ivar Vidfadmi (wide-fathomer) subdued the whole of Sviaveldi (the

Swedish realm); he also got Danaveldi (Danish realm) and a large
part of Saxland, and the whole of Austrriki (Eastern realm, including
Russia, &c.) and the fifth part of England. From his kin have come
the kings of Denmark and the kings of Sweden who have had sole
power in these lands” (Ynglinga Saga, c. 45).

The above is corroborated by another quite independent source.

“Ivar Vidfadmi ruled England till his death-day. As he lay on his
death-bed he said he wanted to be carried to where the land was
exposed to attacks, and that he hoped those who landed there
would not be victorious. When he died it happened as he said, and
he was mound-laid. It is said by many men that when King Harald
Sigurdsson came to England he landed where Ivar’s mound was, and
he was slain there. When Vilhjálm Bastard came to the land he
broke open the mound of Ivar and saw that the corpse was not
rotten; he made a large pyre, and had Ivar burned on it; then he
went up on land and got the victory” (Ragnar Lodbrók’s Saga, c. 19).

We find that not only did the Norwegians call themselves Northmen,
but that both Danes and Sueones were called Northmen in the
Frankish Chronicles.[18]

“The Danes and Sueones, whom we call Northmen, occupy both the
northern shore and all its islands.”

So also Nigellus (in the reign of Louis Le Debonnaire).[19]

“The Danes also after the manner of the Franks are called by the
name of Manni.”

The time came when the people of the North, continuing their
expeditions to Britain, attacked their own kinsmen. After the
departure of the Romans the power of the new comers increased,
and as they became more numerous, they became more and more
domineering: the subsequent struggles were between a sturdy race
that had settled in the country and people of their own kin, and not
with Britons, who had been so easily conquered by the Romans, had
appealed to them afterwards for protection, and had for a long
period been a subject race. It is not easy to believe that the
inhabitants of a servile Roman province could suddenly become
stubborn and fierce warriors, nor are there any antiquities belonging
to the Britain of yore which bear witness to a fierce and warlike
character displayed by the aboriginal inhabitants.
From the preceding pages we see that Franks and Saxons are
continually mentioned together, and it is only in the North we can
find antiquities of a most warlike and seafaring people, who must
have formed the great and preponderating bulk of the invading host
who conquered Britain.
Britain after a continuous immigration from the North, which lasted
several hundred years, became the most powerful colony of the
Northern tribes, several of whose chiefs claimed a great part of
England even in the seventh century. Afterwards she asserted her
independence, though she did not get it until after a long and
tedious struggle with the North, the inhabitants and kings of which
continued to try to assert the ancient rights their forefathers once
possessed. Then the time came when the land upon which the
people of these numerous tribes had settled became more powerful
and more populous than the mother country; a case which has
found several parallels in the history of the world. To-day the people
of England as they look over the broad Atlantic may perhaps discern
the same process gradually taking place. In the people of the United
States of North America, the grandest and most colossal state
founded by England or any other country of which we have any
historical record, we may recognise the indomitable courage, the
energy and spirit which was one of the characteristics of the
Northern race to whom a great part of the people belong. The first
settlement of the country, territory by territory, State by State—the
frontier life with its bold adventures, innumerable dangers, fights,
struggles, privations and heroism—is the grandest drama that has
ever been enacted in the history of the world. The time is not far
distant, if the population of the United States and Canada increases
in the same ratio as it has done for more than a hundred years,
when over three or four hundred millions of its people will speak the
English tongue; and I think it is no exaggeration to say that in the
course of time one hundred millions more will be added, from
Australia, New Zealand and other colonies which to-day form part of
the British Empire, but which are destined to become independent
nations. In fact we hesitate to look still further into the future of the
English race, for fear of being accused of exaggeration.
There is a mythical version of the settlement of Britain contradictory
of the Roman records. This version is that of Gildas whose ‘De
Excidio Britanniæ’ is supposed to have been composed in the sixth
century (560 A.D.), and whose statements have unfortunately been
taken by one historian after the other as a true history of Britain. His
narrative, which gives an account of the first arrival of the Saxons in
Britain and the numerous wars which followed their invasion, has
been more or less copied by Nennius, Bede and subsequent
chroniclers, whose writings are a mass of glaring contradictions,
diffuse and intricate, for they contain names which appear to have
been invented by the writers and which cannot be traced in the
language of those times, while the dates assigned for the landing of
the so-called Saxons do not agree with one another.
The historians who use Gildas as an authority and try to believe his
account of the settlement of Britain by Hengist and Horsa (the
stallion and the mare) are obliged, in order to explain away the
Roman records, to give a most extraordinary interpretation to the
Notitia.
We are all aware that the people of every country like to trace their
origin or history as far back as possible, and that legends often form
part of the fabric of those histories. The early chroniclers, who were
credulous and profoundly ignorant of the world, took these fables for
facts, or they may have possibly been incorporated in the text of
their supposed works after their time. The description of the
settlement of a country must be founded on facts which can bear
the test of searching criticism if they are to be believed and adopted;
Gildas and his copyists cannot stand that test, and the Roman
records, as corroborated by the archæology and literature of the
North and the archæology of England, must be taken as the correct
ones.
The mythological literature of the North bears evidence of a belief
prevalent among the people, that their ancestors migrated at a
remote period from the shores of the Black Sea, through south-
western Russia, to the shores of the Baltic. This belief seems to be
supported by a variety of evidence. Herodotus describes a people on
the Tanais, the Budini, as being blue-eyed and yellow-haired, with
houses built of wood, his description of the walls reminding one of
the characteristics of the Danavirki (Herodotus, IV. 21, 108, 109).
One of his tribes, the Thysagetæ, may possibly be indicated in the
Thursar of the Voluspa, &c.
When we appeal to Archæology, we find in the neighbourhood of the
Black Sea, near to the old Greek settlement, graves similar to those
of the North, containing ornaments and other relics also remarkably
like those found in the ancient graves of Scandinavia. The Runes of
the North remind us strikingly of the characters of Archaic Greek. If
we follow the river Dnieper upwards from its mouth in the Black Sea,
we see in the museums of Kief and Smolensk many objects of types
exactly similar to those found in the graves of the North. When we
reach the Baltic we find on its eastern shores the Gardariki of the
Sagas, where, we are told, the Odin of the North placed one of his
sons, and on the southern shores many specimens have been
discovered similar to those obtained in Scandinavia.
In the following chapters the reader will be struck by the similarity of
the customs of the Norsemen with those of the ancient Greeks as
recorded by Homer and Herodotus; for example, the horse was very
much sacrificed in the North, and Herodotus, describing the
Massagetæ, says:

“They (the Massagetæ) worship the sun only of all the gods, and
sacrifice horses to him” (I. 216).
In regard to the Jutes, Jutland = Jöts, Jötnar; Jötland, Jötunheim,
we find them from the Sagas to be a very ancient land and people,
and meet several countries bearing kindred names—even to this day
we have Göteborg, in which the G is pronounced as English Y.
From the Roman, Greek, Frankish, Russian, English, and Arabic
records, we must come to the conclusion that the “Viking Age”
lasted from about the second century of our era to about the middle
of the twelfth without interruption, hence the title given to the work
which deals with the history and customs of our English forefathers
during that period.
 CHAPTER IV.
THE MYTHOLOGY AND COSMOGONY OF THE
NORSEMEN.

The three poems giving the mythology and cosmogony of the

North—The Völuspa, Vafthrudnismal, Grimnismal, the Asar,
Jötnar, and Thursar—Odin and Vafthrudnir—The nine worlds—
Before the creation—The origin of the Hrim Thursar—Birth of
Ymir—Birth of Odin—Vili and Ve—The ash Yggdrasil—The well
of wisdom—Hel, one of the nine worlds—The bridge Bifröst—
Heimdall—Bergelmir born before the creation—The Jötun—Ymir
slain by Odin—The deluge of blood—Creation of the world—
Divisions of time—End of the world—A new world.

In the three poems called Völuspa, Vafthrudnismal, and Grimnismal,

we have the earliest accounts of the cosmogony and of the
mythology of the people of the North. The grand central figure in the
mythology is Odin. He and his kin formed the people known as Asar
in the lore and literature of the North, and were treated as gods.
These poems are too long to be given here in full, but in the
following pages we have endeavoured, by means of extracts, to give
a more or less consecutive account of the subjects with which they
deal.
The Völuspa was an inspired poem of a Völva or Sibyl,[20] and
embodies the records of the creation of the present world, and of
the time prior to it; of the various races, their origin and history, and
of the chaos and destruction which finally will overtake mankind.
It is in some places so obscure, that if it had not been partly
explained by the later Edda, and had light thrown upon it by the
sagas and ancient laws, it would be impossible to understand its
meaning; and even now it is most difficult, and in some places
impossible to fully comprehend several of its mythical parts, some of
which will always remain enigmatical.
Vafthrudnismal is especially interesting as compared with the
Völuspa, with much of which it corresponds, and some part of which
it amplifies.
The mythical and the real are so intermingled that it is often
impossible to distinguish the one from the other.
In the beginning we are confronted by a chief named Odin, the son
of Bör, who lived near the Tanais (the river Don) not far from the
Palus Mæotis (the Sea of Azof), and there we find one Asgard, which
in all probability had its original in some real locality.
Besides Asar and Jötnar, many other tribes are mentioned which can
hardly be regarded as altogether mythical, some of which may have
inhabited the far north of the ancient Sweden, or part of the present
Russia and Scandinavia; the Thursar, who were also called
Hrimthursar (hoar frost), and the Risar, also Bergrisar (mountain
Risar), appear from these names to have lived in a cold mountainous
country, possibly the region of the Ural Mountains.
Jötunheim, the chief burgh of which was Utgard, would appear to be
a general, vague name given to a very wide extent of country not
embraced in Asaheim (the home of the Asar). Jötunheim, as the
name indicates, was the home or country of the Jötnar and Thursar,
between whom and the Asar there was fierce enmity.
Some of the Jötnar were considered very wise, and Odin, as the
chief of the Asar, determined to go in disguise to Jötunheim, the
home of the Jötnar, in order to seek out the Jötun Vafthrudnir[21] (the
mighty or wise in riddles), who was renowned for his knowledge.
The song begins by representing Odin as consulting his wife, Frigg,
as to the advisability of undertaking the journey. The stanzas which
follow represent Odin questioning Vafthrudnir in his search for
knowledge:—
Then went Odin
To try word-wisdom
Of the all-wise Jötun.
To a hall he came,
Owned by Ymir’s father;
In went Ygg at once.[22]

(As Odin enters he sings—)

Hail, Vafthrudnir,
I have come into thy hall
To look at thyself;
First I want to know,
If thou art a wise
Or an all-wise Jötun.

Vafthrudnir.

Who is the man

That in my hall
Speaks to me?
Thou shalt not
Get out of it
Unless thou art the wiser.

Odin.

I am called Gagnrad,[23]
I have now come from my walking
Thirsty to thy hall;
Needing thy bidding
And thy welcome, Jötun;
Long time have I travelled.

Vafthrudnir.

Why standing on the floor

Dost thou speak to me?
Take a seat in the hall.
Then we shall try
Who knows more,
The guest or the old wise one.

Odin.
 When a poor man
Comes to a rich one
Let him speak useful things or be silent;
Great babbling
I think turns to ill
For one who meets a cold-ribbed[24] man.

We are told in the Völuspa that Odin, in the quest of information,

went to visit the Völva, or Sybil, Heid, who was possessed of
supernatural powers of knowledge and foresight. She asks for a
hearing from the sons of Heimdal, or mankind, and then proceeds to
tell what she recollects:—
I remember Jötnar
Early born,
Who of yore
Raised me;[25]
I remember nine worlds,
Nine ividi[26]
The famous world-tree (Yggdrasil)
Beneath the earth.

The nine worlds were—1, Muspel; 2, Asgard; 3, Vanaheim (home of

the Vanir); 4, Midgard; 5, Alfheim (world of the Alfar); 6, Mannheim
(home of men); 7, Jötunheim (the home of the Jötnar); 8, Hel; 9,
Niflheim.
The first beginnings of all things were apparently as obscure to the
Völva as to others; nothing existed before the Creation. The world
was then a gaping void (Ginnungagap), and there the Jötun Ymir, or
the Hrim Thursar, lived. On each side of Ginnungagap there were
two worlds, Niflheim, the world of cold, and Muspelheim, the world
of heat.
 When Ymir lived
In early ages
Was neither sand nor sea,
Nor cool waves,
No earth was there
Nor heaven above,
There was gaping void
And grass nowhere.

“First there was a home (a world) in the southern half of the world
called Muspel; it is hot and bright, so that it is burning and in
flames; it is also inaccessible for those who have no odals (or family
estates); there the one that sits at the land’s end to defend it is
called a Surt. He has a flaming sword, and at the end of the world
he will go and make warfare and get victory over all the gods, and
burn the whole world with fire” (Later Edda, c. 4).[27]

The origin of the Hrim Thursar and the Birth of Ymir, who lived in
Ginnungagap, and of Odin, Vili, and Ve, is as follows:

“Gangleri asked, ‘How was it before the kindreds existed and

mankind increased?’ Hár answered, ‘When the rivers called Elivagar
had run so far from their sources that the quick venom which flowed
into them, like the dross which runs out of the fire, got hard, and
changed into ice; when this ice stood still and flowed no longer, the
exhalation of the poison came over it and froze into rime; the rime
rose up all the way into the Ginnungagap.’ Jafnhár said, ‘The part of
Ginnungagap turning to the north was filled with the heaviness and
weight of ice and rime, and the opposite side with drizzle and gusts
of wind; but the southern part of Ginnungagap became less heavy,
from the sparks and glowing substances which came flying from
Muspelheim.’ Thridi said, ‘Just as the cold and all things come from
Niflheim, the things near Muspel were hot and shining; Ginnungagap
was as warm as windless air. When the rime and the breath of the
heat met so that the rime melted into drops, a human form came
from these flowing drops with the power of the one who had sent
the heat; he was called Ymir, but the Hrimthursar call him Örgelmir,
and the kin of the Hrimthursar have sprung from him.’ Gangleri
asked, ‘How did the kin grow from this, or how came it that there
were more men; or dost thou believe in the god of whom thou didst
tell now?’ Hár answered, ‘By no means do we think him a god; he
was bad, and all his kinsmen; we call them Hrimthursar. It is told
that when asleep he sweated, and then there grew a man and a
woman from under his left arm, and one of his feet begot a son with
the other; thence have sprung the kin of Hrimthursar. We call Ymir
the Old Hrimthurs.’
“Gangleri asked, ‘Where did Ymir live, or by what?’ ‘It happened next
when the hoar-frost fell in drops that the cow Audhumla grew out of
it; four rivers of milk ran from her teats, and she fed Ymir.’
“Gangleri asked, ‘On what did the cow feed?’ Hár answered, ‘She
licked the rime-stones covered with salt and rime, and the first day
when she licked them a man’s hair came out of them in the evening;
the second day a man’s head; the third day a whole man was there;
he is called Buri; he was handsome in looks, large, and mighty; he
had Bör for son, who got Besla, daughter of Bölthorn jötun, for wife,
and she had three sons, Odin, Vili,[28] Ve; and it is my belief that this
Odin and his brothers are the rulers of heaven and earth. We think
he is called so. Thus the man whom we know to be the greatest and
most famous is called, and they may well give him this name’”
(‘Gylfaginning,’ c. 5).

The ash tree Yggdrasil is one of the strangest conceptions found in

any mythology.
 An ash I know standing
Called Yggdrasil,
A high tree besprinkled
With white loam;
Thence come the dews
That drop in the dales;
It stands evergreen
Spreading over the well of Urd.
Three roots stand
In three directions
Under the ash Yggdrasil;
Hel dwels under one,
The Hrim-thursar under the second,
Under the third “mortal” men.

(Grimnismal).

Under it stands the well of wisdom for a drink from which Odin
pledges his one eye.

“Gangleri said: ‘Where is the head-place or holy place of the Asar?’

Hár answered: ‘At the ash of Yggdrasil, where the gods give their
judgments every day.’ Gangleri asked: ‘What can be told of that
place?’ Jafnhár said: ‘The ash is the largest and best of trees; its
branches spread all over the world and reach up over the heaven;
three roots of the tree hold it up and spread very widely. One (of the
roots) is with the Asar, another with the Hrimthursar where of yore
Ginnungagap was; the third is over Niflheim, and beneath it is
Hvergelmin, but Nidhög gnaws its lower part. Under the root turning
towards the Hrimthursar is Mimir’s well, in which wisdom and
intellect are hidden. Its owner is called Mimir; he is full of wisdom,
for he drinks from the well of the horn Gjallar-horn. Odin came and
asked for a drink of the well, and did not get it till he pawned his
eye.”

“What more wonders,” asked Gangleri, “may be told of the ash?” Hár
answered, “Many wonders. An eagle sits in the limbs of the ash and
knows many things; between its eyes sits the hawk Vedrfölnir. The
squirrel Ratatösk runs up and down the ash and carries words of
envy between the eagle and Nidhög. Four harts run on the limbs of
the ash and eat the buds; they are called Dain, Dvalin, Duneyr, and
Durathror. So many serpents are in Hvergelmir with Nidhög that no
tongue can number them” (Gylfaginning, c. 16).

Heid in the Voluspa tells about the holy tree, and that the horn of
Heimdall is hidden under it till the last fight of the gods. Yggdrasil is
watered from the water of the well.
She knows that the blast
Of Heimdal is hidden
Under the bright
Holy tree;
She sees it poured over
By a muddy stream
From the pledge of Valfödr;
Know ye all up to this and onward?

Under the tree lived the three Nornir (Genii), who shape the
destinies of men.
Thence come three maidens,
Knowing many things,
Out of the hall
Which stands under the tree;
One was called Urd,
Another Verdandi,
The third Skuld;
They carved on wood tablets,
They chose lives,
They laid down laws
For the children of men,
They chose the fates of men.

Hel was one of the nine worlds, and stood under the ash Yggdrasil,
where the dead, who did not die on the battle-field, went. Hence,
when a man had died, Hel-shoes were put on his feet for the
journey.
Odin goes to the world of Hel, in which was the Gnipa cave, in order
to inquire about the fate of his son Baldr who had died.

“Odin threw Hel (daughter of Loki) down into Niflheim, and gave her
power over nine worlds; she was to lodge all those who were sent to
her, namely, those who died of sickness and old age. She has a large
homestead there, and her house-walls are wonderfully high, and her
doors are large. Her hall is called Eljúdnir, her plate famine, her knife
hunger; ganglati (lazy-goer, idler) her thrall; ganglöt (idler) her
bondswoman; her threshhold is called stumbling-block; her bed the
couch of one who is bed-ridden; her bed-hangings (ársal) the
glittering evil. One half of her body is livid, and the other half skin-
colour; therefore she is easily known, and her look is frowning and
fierce” (Later Edda, c. 34, Gylfaginning).

“It is the beginning of this Saga that Baldr the Good dreamt great
and dangerous dreams about his life. When he told them to the Asar
they consulted and resolved to ask for safety for Baldr from every
kind of danger; Frigg (Odin’s wife) took oaths from fire, water, iron,
and every kind of metal, stones, earth, trees, sicknesses, beasts,
birds, poison, serpents, that they would spare Baldr’s life. When this
was done and known, Baldr and the Asar entertained themselves
thus: he stood up at the Things and some gods shot at him, or
others struck at him or threw stones at him. Whatever they did he
was not hurt, and all thought this a great wonder. When Loki
Laufey(jarson) saw this he was angry that Baldr was not hurt. He
changed himself into a woman’s shape and went to Frigg in Fensalir.
Frigg asked this woman if she knew what the Asar were doing at the
Thing. She said that they all shot at Baldr, and that he was not hurt.
Frigg said, ‘Weapons or trees will not hurt Baldr; I have taken oaths
from them all.’ The woman asked, ‘Have all things taken oaths to
spare Baldr’s life?’ Frigg answered, ‘A bush grows east of Valhöll
called Mistiltein (mistletoe); I thought it was too young to take an
oath.’ The woman went away; but Loki took the mistletoe and tore it
up and went to the Thing. Höd (Baldr’s brother) stood in the
outmost part of the ring of people. Loki said to him, ‘Why doest thou
not shoot at Baldr?’ He answered, ‘Because I do not see where he is,
and also I am weaponless.’ Loki said, ‘Do like other men and show
honour to Baldr; I will show thee where he stands; shoot this stick
at him.’ Höd took the mistletoe and shot at Baldr as Loki showed
him; it pierced Baldr, who fell dead to the ground. This was the most
unfortunate deed that has been done among the gods and men.
When Baldr was fallen none of the Asar could say a word or touch
him with their hands, and they looked at each other with the same
mind towards the one who had done this deed, but no one could
take revenge; it was such a place of peace. When they tried to
speak the tears came first, so that no one could tell to the other his
sorrow in words. Odin suffered most from this loss, because he
knew best what a loss and damage to the Asar the death of Baldr
was....” (Gylfaginning, c. 49).

“It is to be told of Hermód that he rode nine nights through dark and
deep valleys and saw nothing before he came to the river Gjöll[29]
and rode on the Gjallar bridge,[30] which is covered with shining gold.
[31]
Modgud is the name of the maiden who guards the bridge; she
asked him his name and kin, and said that the day before five arrays
of dead men rode over the bridge, ‘but the bridge sounds not less
under thee alone, and thou hast not the colour of dead men; why
ridest thou here on the way of Hel?’ He answered, ‘I am riding to Hel
to seek Baldr, or hast thou seen Baldr on the way of Hel?’ She
answered that Baldr had ridden over the Gjallar bridge, ‘but the way
of Hel lies downward and northward.’ Hermód rode till he came to
the gates of Hel; then he alighted and girthed his horse strongly,
mounted and pricked it with the spurs; the horse leaped so high
over the gate that it touched nowhere. Then Hermód rode home to
the hall, alighted, went in and saw his brother Baldr sitting in a high-
seat; he stayed there the night. In the morning Hermód asked Hel to
allow Baldr to ride home with him, and told how great weeping there
was among the Asar. Hel said she would see if Baldr was as beloved
as was told; if all things, living and dead, in the world weep over
him, he shall go back to the Asar, but remain with Hel (me) if any
refuse or will not weep. Then Hermód rose, and Baldr let him out of
the hall and took the ring Draupnir and sent it to Odin as a
remembrance, and Nanna[32] sent to Frigg a linen veil and more
gifts, and to Fulla a gold ring. Then Hermód rode back to Asgard and
told all the tidings he had seen or heard. Thereupon the Asar sent
messengers all over the world to ask that Baldr might be wept out of
Hel, and all did it, men and beasts, earth and stones, trees, and all
metals, as thou must have seen that these things weep when they
come from frost into heat. When the messengers went home and
had performed their errands well, they found a jötun woman sitting
in a cave, called Thökk; they asked her to weep Baldr (out of) Hel;
she answered—
Thökk will weep
With dry tears
The burning voyage of Baldr;
I never enjoyed
A living or a dead man’s son;
May Hel keep what she has.

It is guessed that this was Loki Laufeyjarson, who had caused most
evils among the Asar.”

“Then also the dog Garm, which is tied in front of Gnipa cave, got
loose; he is the greatest terror, he fights Tyr and they kill each
other” (Gylfaginning, c. 5).

The wicked seem to have died twice: first they die and get into Hel,
then they die again and get into Niflhel = Foggy Hel. The following is
one of the answers of Vafthrudnir to Odin:—
 Of the runes[33] of Jötnar
And those of all the gods
I can tell thee true,
For I have been
In every world;
I have gone to nine
Worlds beneath Nifl-hel;
There die the men from Hel.

The sides of the rim of heaven communicate with each other by a

bridge called Bifröst, or the bridge of the Asar, on which Heimdall,
the watchman of the gods, stood.

“Heimdall is the watchman of the gods standing on Bifröst Bridge

(the rainbow)” (Later Edda, 27).

“Heimdall is named the White As: he is great and holy; nine maidens
bore him as son, and they were all sisters. He is also called
Hallinskidi and Gullintanni (gold tooth). His teeth were of gold, his
horse is called gold maned. He lived at a place called Himinbjörg
(heaven mountains) by Bifröst. He is the warden of the gods, and
sits there at the end of heaven to guard the bridge against the Berg
Risar (mountain Jötnar); he needs less sleep than a bird, he can see
equally by night and by day a hundred leagues away, and he hears
when the grass grows, or the wool on the sheep, and all that is
louder than these. He has the horn called Gjallarhorn, and his
blowing is heard through all worlds. The sword of Heimdall is called
Höfud” (Gylfaginning, 27).

We find that the Jötnar and Asar were separated from each other by
a large river whose waters never freeze.
 Vafthrudnir.

Tell me, Gagnrad, &c.,

How the river is called
Which divides the land
Between the sons of Jötnar and the gods.

Odin.

Ifing is the river called

That parts the land
Between the sons of Jötnar and the gods;
Open shall it flow
All the days of the world;
No ice will come on it.

From Vafthrudnismal we learn of the origin of Bergelmir who was

born before the Creation.
It is an important question which are the most ancient people—the
Asar, or the ancient kinsmen of Ymir?
 Odin.

Tell me ...
Who of the Asar,
Or of the sons of Ymir,
Was the oldest in early days?

Vafthrudnir.

Numberless winters
Before the earth was shaped
Was Bergelmir born.
Thrudgelmir
Was his father
And Orgelmir his grandfather.

Odin.

Tell me ...
Whence first Orgelmir came
Among the sons of Jötnar,
Thou wise Jötun.

Vafthrudnir.

From Elivagar[34]
Spurted drops of poison
Which grew into a Jötun;
Thence are our kin
All sprung;
Hence they are always too hideous.

Odin.

Tell me ...
How that strong Jötun
Begat children
As he had not beheld a gyg?[35]

Vafthrudnir.

In the armpit
Of the Hrim-thursar, it is said,
Grew a maiden and a son;
Foot begat with foot
 Of that wise Jötun
A six-headed son.

Odin.

Tell me ...
What thou earliest rememberest,
Or knowest farthest back;
Thou art an all-wise Jötun.

Vafthrudnir.

Numberless winters
Ere the earth was shaped
Was Bergelmir born;
The first I remember
Is when that wise Jötun
Was laid in the flour-bin.[36]

In due course Ymir was slain by Odin, Vili, and Ve, the three sons of
Bör, who was himself a Jötun, and therefore of the same kin as Ymir.
Having slain Ymir, the sons of Bör proceeded to make the earth out
of his body, and to give the sun, moon, and stars their places in
heaven. The flow of his blood was so great as to cause a deluge.
Bergelmir was the only one of the Hrim-Thursar who escaped in a
boat with his wife, and from him came a new race of Hrim-Thursar.

“The sons of Bör slew the Jötun Ymir, but when he fell there flowed
so much blood from his wounds that it drowned the whole race of
the Hrim-Thursar, except one who escaped with his household. Him
the Jötnar called Bergelmir; he and his wife went on board his ark,
and thus saved themselves; from them are descended a new race of
Hrim-Thursar” (Later Edda).

After the destruction of the earlier Hrim-Thursar we hear how the

sons of Bör created the world, and we are told how the earth and
the heavens were made from Ymir.
 From Ymir’s flesh
The earth was shaped,
And from his blood the sea;
The mountains from his bones;
From his hair the trees,
And the heaven from his skull.
But from his brows
The mild gods made
Midgard for the sons of men;
And from his brain
Were all the gloomy
Clouds created.

(Grimnismal.)

We are also told of the creation of the planets and stars, of our
world, of the sea, of the moon, and of day and night. The year was
reckoned by winters (vetr), and the days by nights (nott).
The year was divided into months (mánud or mánad).

“Haustmánud (harvest-month) is the last before winter; Gormánud

(gore-month, called thus from the slaughter of cattle then taking
place) the first month of winter; Frermánud (frost-month);
Hrútmánud (the ram’s month); Thorri (the month of waning or
declining winter); Gói, Einmánud ... then Gaukmánud or Sádtid
(cuckoo-month or sowing-tide); Eggtíd or Stekktíd (egg-tide or
weaning-tide); Sólmánud or Selmánud (sun-month or sæter-month
in which the cattle are removed to the sel or sæter); Heyjannir
(haymaking-month); Kornskurdarmánud (grain-reaping month)”
(Skaldskaparmal, c. 63).

The month was subdivided into six weeks; each week contained five
days. The days were called—Týsdag = Tuesday; Ódinsdag =
Wednesday; Thórsdag = Thursday; Frjádag = Friday; Laugardag
(bath-day) or Thváttdag (washing-day) = Saturday.
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