Introduction To Econometrics Origin Of Econometrics Economists tried to support their ideas with facts and figures in ancient times. Irving Fisher is the first person, developed mathematical equation in the quantity theory of money with help of data. Ragnar Frisch, a Norwegian economist and statistician named the integration of three subjects such that mathematics, statistical methods and economics as Econometrics” in . The term econometrics is formed from two words of Greek origin, ‘oukovouia’ meaning economy and ‘uetpov’ meaning measure.
Econometrics emerged as an independent discipline studying economic phenomena. Econometrics may be considered as the integration of economics, Statistics and Mathematics. Econometrics is an amalgamation of three subjects which can be easily understood by following Venn diagram and picture representation. Ragnar Anton Kittil Frisch Noble Memorial Prize in Ragnar Frisch Economics + Mathematics= Mathematical Economics Mathematical Economics+ Statistical Data & Its Technique = Econometrics {Economics + Statistics + Mathematics}+Empirical Data = Econometrics - - Introduction to Statistical Methods and Econometrics Econometrics means economic measurement.
Econometrics deals with the measurement of economic relationships. Objectives Of Econometrics The general objective of Econometrics is to give empirical content to economic theory. The specific objectives are as follows: . It helps to explain the behaviour of a forthcoming period that is forecasting economic phenomena.
. It helps to prove the old and established relationships among the variables or between the variables . It helps to establish new theories and new relationships. .
It helps to test the hypotheses and estimation of the parameter. Definitions In the words of Arthur S. Goldberger, “Econometrics may be defined as the social science in which the tools of economic theory, mathematics and statistical inference are applied to the analysis of economic phenomena”. Gerhard Tinbergen points out that “Econometrics, as a result of certain outlook on the role of economics, consists of application of mathematical statistics to economic data to lend empirical support to the models constructed by mathematical economics and to obtain numerical results”.
H Theil “Econometrics is concerned with the empirical determination of economic laws” In the words of Ragnar Frisch “The mutual penetration of quantitative econometric theory and statistical observation is the essence of econometrics” . Economics Mathematics Statistics Economic Statistics Mathematical Statistics Mathematical Economics Econometrics - - Introduction to Statistical Methods and Econometrics Methodology Of Econometrics Broadly speaking, traditional or classical econometric methodology consists of the following steps. ) Statement of the theory or hypothesis ) Specification of the mathematical model of the theory ) Specification of the econometric model of the theory ) Obtaining the data ) Estimation of the parameters of the econometric model ) Hypothesis testing ) Forecasting or prediction ) Using the model for control or policy purposes. Economics Mathematics Statistics