1ApEc 8212Econometric Analysis---Lecture #1Conditional Expectations and Related ConceptsI. Introductory RemarksThere are four main uses of econometrics and statistics:1.To measure the characteristics of interestingeconomic variables (for example, the degree ofincome inequality), and the correlations betweendifferent variables of interest (for example, thecorrelation in the returns to two investments).2.To test the validity of economic theories.3.To quantify the magnitudes (and direction) ofeconomic relationships and parameters.4.To forecast/predict future values of variables.Work on the 2ndand 3rd(and maybe the 4th) tasks soonleads to attempts to measurecausalrelationships.Toavoid confusion, researchers must be very careful, andvery explicit, when they analyze data. You should startsimple and then go on to more complicated problems.
3II. Conditional Expectations in Econometrics:]x..,
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Probability theory,Conditional expectation,conditional expectations,E