1. Data in Econometrics Flashcards
What is econometrics?
Econometrics is the use of statistical methods to analyse economic data
What is experimental data?
Data that have been obtained by running a controlled experiment.
What is non-experimental data?
Data that have not been obtained through a controlled experiment.
Which type of data is more commonly used by econometricians?
Non-experimental data
What are the parameters of an econometric model and what is their importance?
The constants ß0, ß1, . . . , ß6 are the parameters of the econometric model, and they describe the directions and strengths of the relationship between crime and the factors used to determine crime in the model.
What is a cross-sectional dataset?
A cross-sectional data set consists of a sample of individuals, households, firms, cities, states, countries, or a variety of other units, taken at a given point in time. In a pure cross-sectional analysis, we would ignore any minor timing differences in collecting the data. If a set of families was surveyed during different weeks of the same year, we would still view this as a cross-sectional data set.
What is an important assumption of cross-sectional data?
The data has been obtained by random sampling from the underlying population
What is the sample selection problem?
Sometimes, random sampling is not appropriate as an assumption for analyzing cross-sectional data. For example, suppose we are interested in studying factors that influence the accumulation of family wealth. We could survey a random sample of families, but some families might refuse to report their wealth. If, for example, wealthier families are less likely to disclose their wealth, then the resulting sample on wealth is not a random sample from the population of all families.
What is time-series data?
A time series data set consists of observations on a variable or several variables over time.
What are some examples of time series data?
Examples of time series data include stock prices, money supply, consumer price index, GDP, annual homicide rates, and automobile sales figures.
Why is the time dimension important in time series data?
Because past events can influence future events and lags in behaviour are prevalent in the social sciences, time is an important dimension in a time series data set. Unlike the arrangement of cross-sectional data, the chronological ordering of observations in a time series conveys potentially important information.
What are some difficulties with time series data?
A key feature of time series data that makes them more difficult to analyze than cross-sectional data is that economic observations can rarely, if ever, be assumed to be independent across time. Most economic and other time series are related, often strongly related, to their recent histories. Also data collection frequency can also be an issue if not consistent
What is the dynamic causal effect?
Time series data allows estimation of the effect on Y of a change in X over time. This is what econometricians call a dynamic causal effect.
What is a pooled cross section?
Some data sets have both cross-sectional and time series features. To increase our sample size, we can form a pooled cross section by combining the two years. Pooling cross sections from different years is often an effective way of analyzing the effects of a new government policy. The idea is to collect data from the years before and after a key policy change. Importantly, pooled cross sections are drawn independently of each other.
What is panel/longitudinal data?
A panel data (or longitudinal data) set consists of a time series for each cross-sectional member in the data set. The key feature of panel data that distinguishes them from a pooled cross section is that the same cross-sectional units (individuals, firms, or counties in the preceding examples) are followed over a given time period.
