Editing Econometrics (section)

{{Short description|Empirical statistical testing of economic theories}}
{{broader|Mathematical economics}}
{{EngvarB|date=October 2017}}
{{Use dmy dates|date=October 2017}}
{{Economics sidebar}}

'''Econometrics''' is an application of [[Statistics|statistical methods]] to economic data in order to give [[Empirical evidence|empirical]] content to economic relationships.<ref name="Pesaran">[[M. Hashem Pesaran]] (1987). "Econometrics", ''[[The New Palgrave: A Dictionary of Economics]]'', v. 2, p. 8 [pp. 8–22]. Reprinted in J. Eatwell ''et al.'', eds. (1990). ''Econometrics: The New Palgrave'', [https://books.google.com/books?id=gBsgr7BPJsoC&dq=econometrics&pg=PA1=false p. 1] {{Webarchive|url=https://web.archive.org/web/20230315074724/https://books.google.com/books?id=gBsgr7BPJsoC&dq=econometrics&pg=PA1=false |date=15 March 2023 }} [pp. 1–34].  [http://www.dictionaryofeconomics.com/article?id=pde2008_E000007&edition=current&q=Econometrics&topicid=&result_number=2 Abstract] {{webarchive|url=https://web.archive.org/web/20120518001558/http://www.dictionaryofeconomics.com/article?id=pde2008_E000007&edition=current&q=Econometrics&topicid=&result_number=2 |date=18 May 2012 }} ([[The New Palgrave Dictionary of Economics|2008]] revision by J. Geweke, J. Horowitz, and H. P. Pesaran).</ref> More precisely, it is "the quantitative analysis of actual economic [[Phenomenon|phenomena]] based on the concurrent development of theory and observation, related by appropriate methods of inference."<ref>[[Paul Samuelson|P. A. Samuelson]], [[Tjalling Koopmans|T. C. Koopmans]], and [[Richard Stone|J. R. N. Stone]] (1954). "Report of the Evaluative Committee for ''Econometrica''", ''Econometrica'' 22(2), p. 142. [p [https://www.jstor.org/pss/1907538 p. 141]-146], as described and cited in Pesaran (1987) above.</ref> An introductory [[economics]] textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships."<ref>Paul A. Samuelson and [[William D. Nordhaus]], 2004. ''[[Economics (textbook)|Economics]]''. 18th ed., McGraw-Hill, p. 5.</ref> [[Jan Tinbergen]] is one of the two founding fathers of econometrics.<ref>{{cite web|url=http://www.elsevierweekblad.nl/Economie/achtergrond/2015/10/1969---Jan-Tinbergen-Nobelprijs-economie-2700626W/?masterpageid=5573|title=1969 - Jan Tinbergen: Nobelprijs economie - Elsevierweekblad.nl|date=12 October 2015|website=elsevierweekblad.nl|access-date=1 May 2018|url-status=live|archive-url=https://web.archive.org/web/20180501212351/https://www.elsevierweekblad.nl/Economie/achtergrond/2015/10/1969---Jan-Tinbergen-Nobelprijs-economie-2700626W/?masterpageid=5573|archive-date=1 May 2018|df=dmy-all}}</ref><ref>Magnus, Jan & Mary S. Morgan (1987) ''The ET Interview: Professor J. Tinbergen'' in: 'Econometric Theory 3, 1987, 117–142.</ref><ref>Willlekens, Frans (2008) ''International Migration in Europe: Data, Models and Estimates.'' New Jersey. John Wiley & Sons: 117.</ref> The other, [[Ragnar Frisch]], also coined the term in the sense in which it is used today.<ref>• H. P. Pesaran (1990), "Econometrics", ''Econometrics: The New Palgrave'', [https://books.google.com/books?id=gBsgr7BPJsoC&dq=econometrics&pg=PA2=false p. 2] {{Webarchive|url=https://web.archive.org/web/20230315074724/https://books.google.com/books?id=gBsgr7BPJsoC&dq=econometrics&pg=PA2=false |date=15 March 2023 }}, citing Ragnar Frisch (1936), "A Note on the Term 'Econometrics'", ''Econometrica'', 4(1), p. 95.<br />&nbsp;&nbsp; {{*}} Aris Spanos (2008), "statistics and economics",  ''[[The New Palgrave Dictionary of Economics]]'', 2nd Edition. [http://www.dictionaryofeconomics.com/article?id=pde2008_S000502&edition=current&q=statistics&topicid=&result_number=1 Abstract.] {{webarchive|url=https://web.archive.org/web/20120518001702/http://www.dictionaryofeconomics.com/article?id=pde2008_S000502&edition=current&q=statistics&topicid=&result_number=1 |date=18 May 2012 }}</ref>

A basic tool for econometrics is the [[multiple linear regression]] model.<ref name="Greene Econometrics – multiple linear regression model" /> ''Econometric theory'' uses [[statistical theory]] and [[mathematical statistics]] to evaluate and develop econometric methods.<ref name="Greene Econometrics – mathematical statistics and statistical theory">{{cite book | author=Greene, William | title=Econometric Analysis | date=2012 | publisher=Pearson Education | isbn=9780273753568 | pages=34, 41–42 | edition=7th }}</ref><ref name="Wooldridge Econometrics – mathematical statistics">{{cite book | author=Wooldridge, Jeffrey | title=Introductory Econometrics: A Modern Approach | date=2012 | publisher=South-Western Cengage Learning | isbn=9781111531041 | page=2 | edition=5th | chapter=Chapter 1: The Nature of Econometrics and Economic Data }}</ref> Econometricians try to find [[estimator]]s that have desirable statistical properties including [[Bias of an estimator|unbiasedness]], [[Efficiency (statistics)|efficiency]], and [[Consistent estimator|consistency]]. ''Applied econometrics'' uses theoretical econometrics and real-world [[economic data|data]] for assessing economic theories, developing [[econometric model]]s, analysing [[economic history]], and [[Economic forecasting|forecasting]].