Econometrics

Econometrics Flow Chart of Anatomy / Methodology of Econometrics Anatomy of Econometric Modeling Difference between the Econometric model with Mathematical models and statistical models . Models in Mathematical Economics are developed based on Economic Theories, while, Econometric Models are developed based on Economic Theories to test the validity of Economic Theories in reality through the actual data. . Regression Analysis in Statistics does not concentrate more on error term while Econometric Models concentrate more on error terms Statistics Regression: Yi = β + β X i Econometrics Regression: Yi = β + β X i + U i (with more than variables) or Y = β + β X + β X + β X +U i Economic theory Mathematical model of the theory Economic model of the theory Data Estimation of econometric model Hypothesis Testing Forecasting or prediction Using the model for control or policy purpose - - Introduction to Statistical Methods and Econometrics