Empirical statistical testing of economic theories / From Wikipedia, the free encyclopedia

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Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships.[1] More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference."[2] An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships."[3] Jan Tinbergen is one of the two founding fathers of econometrics.[4][5][6] The other, Ragnar Frisch, also coined the term in the sense in which it is used today.[7]

A basic tool for econometrics is the multiple linear regression model.[8] Econometric theory uses statistical theory and mathematical statistics to evaluate and develop econometric methods.[9][10] Econometricians try to find estimators that have 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.

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