dougherty3e_intro - Dougherty: Introduction to Econometrics...

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Dougherty: Introduction to Econometrics 3e Study Guide Introduction What is econometrics, and why study it? Econometrics is the application of statistical methods to the quantification and critical assessment of hypothetical economic relationships using data. It is with the aid of econometrics that we discriminate between competing economic theories and put numerical clothing onto the successful ones. Econometric analysis may be motivated by a simple desire to improve our understanding of how the economy works, at either the microeconomic or macroeconomic level, but more often it is undertaken with a specific objective in mind. In the private sector, the financial benefits that accrue from a sophisticated understanding of relevant markets and an ability to predict change may be the driving factor. In the public sector, the impetus may come from an awareness that evidence- based policy initiatives are likely to have the greatest impact. It is now generally recognized that nearly all professional economists, not just those actually working with data, should have a basic understanding of econometrics. There are two major benefits. One is that it facilitates communication between econometricians and users of their work. The other is the development of the ability to obtain a perspective on econometric work and to make a critical evaluation of it. Econometric work is more robust in some contexts than in others. Experience with the practice of econometrics and a knowledge of the potential problems that can arise are essential for developing an instinct for judging how much confidence should be placed on the findings of a particular study. Such is the importance of econometrics that, in common with intermediate macroeconomics and microeconomics, an introductory course forms part of the core of any serious undergraduate degree in economics and is normally a prerequisite for admission to a master’s level course in economics or finance. Aims of 20 Elements of Econometrics and Economic Statistics The aim of 20 Elements of Econometrics and Economic Statistics is to give you an opportunity to develop an understanding of econometrics to a standard that will equip you to understand and evaluate most applied analysis of cross-sectional data and to be able to undertake such analysis yourself. The restriction to cross-sectional data (data raised at one moment in time, often through a survey of households, individuals, or enterprises) should be emphasized because the analysis of time series data (observations on a set of variables over a period of time) is much more complex. Chapters 11–13 of the text and this guide are devoted to the analysis of time series data, but the objectives are confined to giving you an understanding of the problems involved and making you aware of the need for a master’s level course if you intend to work with such data. How to make use of the text
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This note was uploaded on 05/26/2010 for the course ECON 301 taught by Professor Öcal during the Spring '10 term at Middle East Technical University.

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dougherty3e_intro - Dougherty: Introduction to Econometrics...

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