Introduction to Econometrics. Bacisc of Regression Analysis

Published: 2021-09-14 12:30:11
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ContentIntroduction to Econometrics…………………………………………………        3 Main Concepts of Econometrics……………………………………        3 Econometrics Elements…………………………………………….. 5 Econometrics Methodology…………………………………………        6Theoretical Basics to Regression Analysis……………………………………        13 Key Ideas and Terminology…………………………………………        13 Linear Regression Model…………………………………………….        16 Regression Model Selection Process        ………………………………..18Conclusions        ………………………………………………………………………...20Bibliography……………………………………………………………………….        22Appendixes        ………………………………………………………………………..        24Introduction to EconometricsMain Concepts of EconometricsThe term "econometrics" was first used by the Polish accountant Pawel Ciompa in 1910. He decided that he could get a new insight into the results of operations, if the mathematical techniques (algebra and geometry) are applied to accounting data. Despite the fact that this concept has not received further development, the term "econometrics" was remembered and found the application for designation of a new branch of economic knowledge, formed in 1930 [1; 4].The word "econometrics" consists of a combination of two words: "the economy" and "metrics". This term already emphasizes the content of econometrics as a science, namely quantification of links and relations, disclosed and justified by economic theory. Let’s have a closer look at some other definitions of the term “econometrics”[1].“Econometrics is an amalgam of economic theory, mathematical economics, economic statistics, and mathematical statistics” (Gujarati, 2009).“Econometrics is application of the mathematical statistics to economic data in order to lend empirical support to the economic mathematical models and obtain numerical results” (Tintner, 1968).“Econometrics is the quantitative analysis of actual economic phenomena based on concurrent development of theory and observation, related by appropriate methods of inference” (P.A.Samuelson, T.C.Koopmans and J.R.N.Stone, 1954).“It consists of the application of mathematical statistics to economic data to lend empirical support to the models constructed by mathematical economics and to obtain numerical results” (Gerhard, 1968).“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” (Goldberger, 1964).“Econometrics is concerned with the empirical determination of economic laws” (Theil, 1971).In 1933, a scientist R. Frisch gave his definition of econometrics: "Econometrics is not the same as economic statistics. It is not identical to economic theory, although much of this theory is quantitative. Econometrics is not synonymous with the application of mathematics to economics. Each of the three starting points - statistics, economic theory and mathematics - is necessary but not sufficient for the understanding of quantitative relations in modern economic life. Econometrics is the unity of all three components. " [2; 8]

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