An Introduction to Econometrics
Introduction of Econometrics
The word "Econometrics" is composed by the combination of two word, i.e. 'Econo' and 'Metrics' 'Econo' stands for economic or economics while 'Metrics' means measurement. Therefore, the term econometrics simply means the 'economic measurement' or the 'economics of measurement'. But the scope of the Econometrics is not limited to the economic measurement.
In econometrics, the economic theories are first transformed into the mathematical models, these mathematical model are then estimated using statistical techniques to confirm and verify the economic theory. Before, estimation of the econometric models economic statistics are gathered about the variables under study. Therefore, we can say that econometrics is a combination of (i) Economics (Economic Theory), (ii) Mathematical Economics (iii) Economic Statistics (data) (iv) Statistics.
Definition of Econometrics
Econometrics is a branch of economics which empirically verifies (tests) the validity of economic theory through estimating the mathematical model by employing statistical tools on economic data (statistics).
Simply speaking, econometrics deals with the quantitative analysis (empirical determination) of economic laws and principles through using the knowledge of economics, mathematics and statistics.
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