Lars Pålsson-Syll schrieb: > Hi, > Trying to replicate a Monte Carlo simulation in Hill/Griffiths/LIm "Principles of econometrics" (3rd ed, p 273) > I run in to problem when in my script trying to incorporate that the population correlation between the x-values and > the error-values should be 0.6. Could anyone help me? > Best regards, > Lars If your question is how to produce (pseudo-) random series with the needed correlation structure, then create two independent series and multiply that vector (actually 2-col data matrix) with an appropriate matrix (cholesky factor of the wanted covariance matrix).