ch01 - Welcome to Economics 20 What is Econometrics?...

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Economics 20 - Prof. Anderson 1 Welcome to Economics 20 What is Econometrics?
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Economics 20 - Prof. Anderson 2 Why study Econometrics? Rare in economics (and many other areas without labs!) to have experimental data Need to use nonexperimental, or observational, data to make inferences Important to be able to apply economic theory to real world data
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Economics 20 - Prof. Anderson 3 Why study Econometrics? An empirical analysis uses data to test a theory or to estimate a relationship A formal economic model can be tested Theory may be ambiguous as to the effect of some policy change – can use econometrics to evaluate the program
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Economics 20 - Prof. Anderson 4 Types of Data – Cross Sectional Cross-sectional data is a random sample Each observation is a new individual, firm, etc. with information at a point in time If the data is not a random sample, we have a sample-selection problem
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Economics 20 - Prof. Anderson 5 Types of Data – Panel Can pool random cross sections and treat
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ch01 - Welcome to Economics 20 What is Econometrics?...

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