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Econometrics, Lecture 1 (1).pdf - Econometrics Lecture 1...

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EconometricsLecture1The nature and scope ofeconometrics
1.1 What is Econometrics?1.2 Why Study Econometrics?1.3 The Methodology of Econometrics?
What is EconometricsEconometrics means economic measurement. Althoughquantitative measurement of economic concepts such asgross domestic product (GDP) unemployment, inflation,imports, and exports is very important, the scope ofeconometrics is much broader, as can be seen from thefollowing definition:Econometrics may be defined as the social science inwhich the tools of economic theory, mathematics, andstatistical inference are applied to analysis of economicphenomena.
Econometrics ,the result of a certain outlook onthe role of economics, consists of the applicationof mathematical statistics to economic data tolend empirical support to the models constructedbymathematicaleconomicsandtoobtainnumerical results.
Why Study Econometrics:Why a separate discipline?Econometrics is concerned with the empiricaldetermination of economic laws.As preceding definitions suggest, econometricsmakes use of economic theory, mathematicaleconomics,economicstatistics(data),andmathematical statistics. Yet, it is a subject thatdeserves to be studied in its own right for thefollowing reasons.
Econometrics vs Economic theoryEconomic theorymakes statements or hypotheses thataremostlyqualitativeinnature.Forexamplemicroeconomictheorystatesanegativeorinverserelationship between the price and quantity demandedof a commodity (The law of demand). But the theory itself does not provide any numerical measure of thestrengthoftherelationshipbetweenthetwo,econometricsgivesempiricalcontenttomosteconomic theory
Econometrics vs mathematical economicsThe main concern ofmathematical economicsis to express economic theory inmathematicalform of equations(or models) without regard toempirical

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Economics, Econometrics vs Economic theory

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