Econometrics unites economic theory with economic statistics and mathematics. The end goal is to analyze and test economic relationships, using different scenarios and theoretical situations to predict what might logically happen. Students who do well in this discipline are generally bright in financial economics, economic research and statistics. What started in the thirties following the Great Depression is now being offered by leading economists at universities around the world.
It's a common misconception that economic statistics and econometrics are exactly the same thing. The difference is that statistics are performed in controlled experiments with known data sets, whereas econometrics deals with data as is or data that is subjected to hypothetical possibilities too. Regression analysis is often used in this technique, which determines the mean of random variables is predicted based on the mean of previously measured variables. Other tools used include time-series analysis (measuring variables over a period of time) and cross-sectional analysis (studying the correlation between two variables at a certain point in time).
As such, econometrics is an important area of economic research today. Rather than just relying on theory, economists can ground their assumptions in mathematical evidence in a more practical way. In the end, they may find that reducing interest rates leads to rises in lending, based on past activity. Or one may note that income levels increase in a straight line with levels of education. Governments use this method when determining international trade policies and projected budgets. Businesses use it when planning salary increases, crafting performance expectations and deciding their budgets. While it may not be perfect, it is an important tool used in economics today. Institutes who require quantitative methods of analyzing data, forecasting, modeling and forming policy need this.33333333
Economics research experts say there have been 32 recessions since'54. The average economic recession lasted 17 months and began to expand for another 38 months before a full rebound was achieved. In recent history, we suffered a---month recession from July'81 through to November'82, an 8-month recession from July'90 through March'91 and another 8-month recession from March 2001 to November 2001. The current recession began in December 2007. While it caught average Americans off-guard, top market analysts were shaking their heads, saying they saw it coming for years.
According to "macro economics" professors Antonio Fatas and Ilian Mihov at the INSEAD International Business School, there were some "classic macroeconomic imbalances that predicted the crisis." They argue the best way to avoid an economic recession is to have a stable pattern of consumption that matches national GDP, as we see in countries like Germany and France. In the US, the GDP went up 1% in the first quarter of 2008, which is extremely low, and then retracted 0.5% in the third quarter, which is the worst decline since 2001. When advanced economies build insurmountable deficits and their Gross Domestic Products decline, you can be rest assured a recession is on its way.
"Economists are frequently interested in relationships between different quantities, for example between individual wages and the level of schooling. The most important job of econometrics is to quantify these relationships on the basis of available data and using statistical techniques, and to interpret, use or exploit the resulting outcomes appropriately" (A Guide To Modern Econometrics, Marno Veerbeek, 2008). In essence, this technique combines basic economics, observed data and statistical methods. The textbook goes on to say, "It is the interaction of these three that makes econometrics interesting, challenging and, perhaps, difficult."
Economic theory has become a popularity issue, even a political football of the elitists. Sound Friedman school economic theory has been put in the box by politicians favoring the drunken spending theories proposed by Keynesian economic theory. Theory need building on quantifying realistic relationships and accounting for potential cyclical explosions.The economic recession has spread its insidious tentacles outside of the U.S. to global economics, hurting countries like Latvia, Estonia, Iceland, Ireland, Lithuania, Seychelles, Venezuela, Ukraine and Jamaica. Economics research shows that even the UK, Japan, China and Canada are feeling the pinch of America's pain. There's no telling how long we'll be in this recession or what the formula is for digging out, but many Americans are willing to trust the Obama-Biden administration with the task, while simply hoping and praying that we'll see a turnaround soon. - 31384
It's a common misconception that economic statistics and econometrics are exactly the same thing. The difference is that statistics are performed in controlled experiments with known data sets, whereas econometrics deals with data as is or data that is subjected to hypothetical possibilities too. Regression analysis is often used in this technique, which determines the mean of random variables is predicted based on the mean of previously measured variables. Other tools used include time-series analysis (measuring variables over a period of time) and cross-sectional analysis (studying the correlation between two variables at a certain point in time).
As such, econometrics is an important area of economic research today. Rather than just relying on theory, economists can ground their assumptions in mathematical evidence in a more practical way. In the end, they may find that reducing interest rates leads to rises in lending, based on past activity. Or one may note that income levels increase in a straight line with levels of education. Governments use this method when determining international trade policies and projected budgets. Businesses use it when planning salary increases, crafting performance expectations and deciding their budgets. While it may not be perfect, it is an important tool used in economics today. Institutes who require quantitative methods of analyzing data, forecasting, modeling and forming policy need this.33333333
Economics research experts say there have been 32 recessions since'54. The average economic recession lasted 17 months and began to expand for another 38 months before a full rebound was achieved. In recent history, we suffered a---month recession from July'81 through to November'82, an 8-month recession from July'90 through March'91 and another 8-month recession from March 2001 to November 2001. The current recession began in December 2007. While it caught average Americans off-guard, top market analysts were shaking their heads, saying they saw it coming for years.
According to "macro economics" professors Antonio Fatas and Ilian Mihov at the INSEAD International Business School, there were some "classic macroeconomic imbalances that predicted the crisis." They argue the best way to avoid an economic recession is to have a stable pattern of consumption that matches national GDP, as we see in countries like Germany and France. In the US, the GDP went up 1% in the first quarter of 2008, which is extremely low, and then retracted 0.5% in the third quarter, which is the worst decline since 2001. When advanced economies build insurmountable deficits and their Gross Domestic Products decline, you can be rest assured a recession is on its way.
"Economists are frequently interested in relationships between different quantities, for example between individual wages and the level of schooling. The most important job of econometrics is to quantify these relationships on the basis of available data and using statistical techniques, and to interpret, use or exploit the resulting outcomes appropriately" (A Guide To Modern Econometrics, Marno Veerbeek, 2008). In essence, this technique combines basic economics, observed data and statistical methods. The textbook goes on to say, "It is the interaction of these three that makes econometrics interesting, challenging and, perhaps, difficult."
Economic theory has become a popularity issue, even a political football of the elitists. Sound Friedman school economic theory has been put in the box by politicians favoring the drunken spending theories proposed by Keynesian economic theory. Theory need building on quantifying realistic relationships and accounting for potential cyclical explosions.The economic recession has spread its insidious tentacles outside of the U.S. to global economics, hurting countries like Latvia, Estonia, Iceland, Ireland, Lithuania, Seychelles, Venezuela, Ukraine and Jamaica. Economics research shows that even the UK, Japan, China and Canada are feeling the pinch of America's pain. There's no telling how long we'll be in this recession or what the formula is for digging out, but many Americans are willing to trust the Obama-Biden administration with the task, while simply hoping and praying that we'll see a turnaround soon. - 31384
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