Econometrics

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Econometrics

Econometrics (pronunciation: /ˌiːkənəˈmɛtrɪks/) is a branch of economics that uses mathematical and statistical methods to analyze economic data and test economic theories.

Etymology

The term "econometrics" was coined by Ragnar Frisch, a Norwegian economist, in the 1930s. It is derived from the Greek words "oikonomia" meaning "household management" and "metron" meaning "measure".

Definition

Econometrics is the application of statistical and mathematical models to economic data for the purpose of testing theories, hypotheses, and future trends. It is used in various fields such as finance, labor economics, macroeconomics, and microeconomics.

Related Terms

  • Economic Model: A simplified representation of an economic process. This can be expressed in words, equations, or diagrams.
  • Statistical Analysis: The collection, organization, analysis, interpretation, and presentation of data.
  • Macroeconomics: The study of the behavior and performance of an economy as a whole.
  • Microeconomics: The study of individuals' and firms' behavior in decision making and allocation of resources.
  • Regression Analysis: A statistical process for estimating the relationships among variables.
  • Time Series Analysis: A method of analyzing data points collected over time.

Applications

Econometrics is used to understand and predict how certain changes in the economy will affect the market. It is also used to formulate economic policies and strategies, and to make decisions in business and finance.

See Also

External links

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