# unit1.pdf - ECONOMETRIC I Expected Outcomes • Explain...

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ECONOMETRIC I
Expected OutcomesExplain important statistical and econometric concepts.Apply basic simple and multiple linear regression estimationprocedure to real world problems.Generate and test hypotheses.Explain basic assumptions of the Ordinary Least Squares (OLS), testtheir validity in practical situations, and deal with their violations.Describe the features of different types of economic dataCommand some basic tools and techniques of econometric analysis.Undertake research using econometric methods.
Recommended ReadingsGujarati, D. N., 2005. Basic Econometrics. McGraw Hill, 4thED.Gujarati, D. N., 1999. Essentials of Econometrics. McGraw-Hill, 2ndED.Maddala, G. S., 2001. Introduction to Econometrics. John Wiley, 3rdEDWooldridge J. M., 2009. Introductory Econometrics. A ModernApproach. South-Western, 4thED.
Introduction to EconometricsEconometrics means "economic measurement."“Econometricsmay be defined as the social science in which the toolsofeconomictheory,mathematics,andstatisticalinferenceareapplied to the analysis of economic phenomena.Econometrics is based upon the development of statistical methodsfor estimating economic relationships, testing economic theories, andevaluating and implementing government and business policy.Research methods employed by economists, which includes the fieldof econometrics, are useful to a broad spectrum of individuals.Econometricsisconcernedwiththeempiricaldeterminationofeconomic law.
Econometrics refers to the application of economic theory,mathematics, and statistical techniques for the purpose of testinghypotheses and estimating and forecasting economic phenomena.Economic theory makes statements or hypotheses that are mostlyqualitative in natures.Econometrics gives empirical content to most economic theory.[itprovidesnumerical estimatesof economic theory]It regards the measurability or empirical verification of the theory.
Branches of EconometricsSubdivided into Theoretical and Applied Econometrics.Theoretical econometrics refers to the methods for measurement ofeconomic relationships in general.For example,Ordinaryleast squares.Theoretical econometrics considers the assumptions of this method,its properties, and what happens to these properties when one ormore of the assumptions of the method are not fulfilled.
Applied EconometricsApplied econometrics examines the problems encountered and thefindings in particular fields of economics, such as demand theory,production, investment, consumption, and other fields of appliedeconomic research.In short, applied econometrics usesthe tools of theoreticaleconometrics to study some special field(s) of economics andbusinessEconometrics is partlyan art and partly a science, (intuition and goodjudgment of the econometrician plays a crucial role).
Functions of Econometrics(Analysis) ToTESTeconomic theories or hypotheses.

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