Econ 399 Chapter1 - Econ 399 Introductory Econometrics...

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Econ 399 Introductory Econometrics Multivariable Regressions Multivariable Inference Multivariable Statistical Adjustments Lorne Priemaza, M.A. Lorne.priemaza@ualberta.ca
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1. Nature of Econometrics 1.1 What is Econometrics? 1.2 Steps in Empirical Economic Analysis 1.3 The Structure of Economic Data 1.4 Causality and the Notion of Ceteris Paribus in Econometric Analysis *Note: All uncredited quotes are from Wooldridge’s Introductory Econometrics (2006)
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1.1 What is Econometrics? Definition “Econometrics is based upon the  development of statistical methods for  estimating economic relationships,  testing economic theories, and  evaluating and implementing…policy”
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1.1 What is Econometrics? Uses -What impact does the price of writable  DVD’s have on the price of movie popcorn?  (estimating relationship) -Success of a marriage is inversely related  to time spent dating. (testing theory) -Implementing a health care fee acts to  eliminate waste.  (evaluating policy) 
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Econometrics vs. Math. Statistics  (generally) Econometrics Deals with problematic nonexperimental data Nonexperimental Data: Observational Data, observations of agents in the real world Researcher is a passive collector of data from the real world Mathematical Statistics Deals with controlled Experimental Data Experimental Data: Data collected in a controlled environment Researcher is an active collector in a controlled, artificial environment
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1.1 What is Econometrics? Econometrics - Using a hidden camera in a supermarket,  27% of shoppers bought  Captain Chocolate’s  Chocolate Heart Attack in a Box   (CCCHAB)   with extra Chocolate marshmallows Mathematical Statistics -In a focus group of 57 people, 63% chose  CCCHAB  over the top 3 chocolate brands
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1.1 What is Econometrics? Note -Econometrics  can  use controlled experiments  and statistics originally devised ways to deal with  observable data -Due to monetary, scope and morality  constraints, econometricians wrestle with  nonexperimental data more often   -ie: a lab study on the mortality rate of middle  class citizens using cell phones is monetarily,  morally, and administratively unfeasible  
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1.2 Steps in Empirical Economic Analysis -Empirical analysis generally arises from two  areas: 1) Estimating a Relationship   Ie: What factors determine a hockey  player’s salary? 2) Testing a Theory Ie: Studying after 11pm is less effective  than studying before 11pm.
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1.2 Steps in Empirical Economic Analysis “An  Empirical Analysis  uses  data to test a theory or  estimate a relationship.” How?
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1.2 Steps in Empirical Economic Analysis 1) Formulate a question/hypothesis   -Does income influence driving habits? 2) Construct an economic model
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This note was uploaded on 03/14/2009 for the course ECON ECON 399 taught by Professor Priemaza during the Spring '09 term at University of Alberta.

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Econ 399 Chapter1 - Econ 399 Introductory Econometrics...

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