Financial econometrics will be defined as the application of statistical techniques to problems in finance. However, the main techniques employed for studying economic problems are of equal importance in financial applications. The literal meaning of the word econometrics is ‘measurement in economics’. Type of equations in mathematical modeling: behavioral equations and identities. the effect of school spending on student performance.Ģ4. Forecasting the effect of specific policy i.e. Main application of econometrics – forecasting macroeconomic and financial variables. Role of econometrics –develop statistical methods for: 1) estimating economic relationship 2) testing economic theories 3) evaluating and implementing government and business policy. The wage of n workers in 06.2010 and in 06.2011. Multidimensional (Pooled) panel data-we observe n cross-sections data at periods T. the daily prices of n blue chip stocks over year 2010 and year 2011.
#Economic data analysis methods series#
Panel data have the dimensions of both time series and cross-sections, For ex. What we observed this period is based on what we observed previous period (we should observe a particular family). This data CANNOT be obtained at random sampling.
In the time-series data the period (year, quarter, month) is important.
expenditure on apples of one household in Russia in 2010-2012. Time series data, as the name suggests, are data that have been collected over a period of time on one or more variables. For this reason it is the easiest type of data to analyze. For example: expenditure on apples of one household in Moscow in. In many econometric contexts, the commonly-used ordinary least squares method may not recover the theoretical relation desired or may produce estimates with poor statistical properties, because the assumptions for valid use of the method are violated.įour types of Economic Data: Cross-sectional data are data on one or more variables (consumers, firms etc) collected at a single point in time. Single-equation methods model a single variable (the dependent variable) as a function of one or more explanatory (or independent) variables. When they are time-series the data sets are usually monthly but can be quarterly and annual.Įconomic data may also describe functions or inter-relationships between variables and they may describe a static as opposed to a dynamic relationshipĮconometric analysis may also be classified on the basis of the number of relationships modeled.
Main object of Eshould be to promote studies that aim at a unification of the theoretical-quantative and empirical-quantative approach to economic problems.Įconomic data are commonly numerical time-series, i.e., sets of data (covering periods of time) for part or all of a single economy or the international economy. experimentation, observation and statistical methods.E is the same as economic statistics. This method uses three tools for economic generalization i.e. In this method facts and figures of a particular nature of problem are collected and arranged in a systematic way from which the general principles are drawn. It means that general principles are derived from the observed facts. According to this method we proceed from a particular state of affairs to general principles. The inductive method is also known as empirical method. They were of the view that deductive method leads to many misleading conclusions conducted on the basis of incorrect assumptions. The German school was represented by famous economists like Roscher, Hilbrand and Frederick. A more reliable approach towards the methodology of economic analysis was introduced by the “German Historical School of Economists” in the form of inductive method.
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