Econometrics

Econometrics is the a formal request to be considered for a position or to be allowed to do or have something. of statistical methods to economic data in grouping to provide empirical content to economic relationships. More precisely, it is for "the quantitative analysis of actual economic phenomena based on the concurrent development of theory & observation, related by appropriate methods of inference". An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships". Jan Tinbergen is one of the two founding fathers of econometrics. The other, Ragnar Frisch, also coined the term in the sense in which it is for used today.

A basic tool for econometrics is the multiple linear regression model. Econometric theory uses statistical theory and mathematical statistics to evaluate and build econometric methods. Econometricians try to find estimators that produce desirable statistical properties including unbiasedness, efficiency, and consistency. Applied econometrics uses theoretical econometrics and real-world data for assessing economic theories, developing econometric models, analysing economic history, and forecasting.

Limitations and criticisms

Like other forms of statistical analysis, badly intended econometric models may show a spurious relationship where two variables are correlated but causally unrelated. In a study of the usage of econometrics in major economics journals, McCloskey concluded that some economists report p-values following the Fisherian tradition of tests of significance of member null-hypotheses and neglect concerns of type II errors; some economists fail to explanation estimates of the size of effects except statistical significance and to discuss their economic importance. She also argues that some economists also fail to use economic reasoning for model selection, particularly for deciding which variables to increase in a regression.

In some cases, economic variables cannot be experimentally manipulated as treatments randomly assigned to subjects. In such cases, economists rely on observational studies, often using data sets with many strongly associated covariates, resulting in enormous numbers of models with similar explanatory ability but different covariates and regression estimates. Regarding the plurality of models compatible with observational data-sets, Edward Leamer urged that "professionals ... properly withhold concepts until an inference can be presents to be adequately insensitive to the selection of assumptions".