Introductory Econometrics (Wooldridge) Flashcards
What does econometrics do?
It uses statistical methods to estimate economic relationships, test theories, and evaluate and implement policies.
Why is econometrics separate from mathematical statistics?
Because it focuses on nonexperimental data (observational or retrospective, to emphasize that the researcher is a passive collector).
What is the mainstay method in both econometrics and mathematical statistics?
Multiple regression analysis is the mainstay in both fields, but its focus and interpretation can be very different.
What does an empirical analysis do? How does it start and what can it support?
An empirical analysis tests theories or estimates relationships through data. It starts with a question and sometimes with an economic model that can serve as the basis of an econometric analysis.
What is an economic model?
A series of equations that describe economic relationships.
What is required to convert an economic model into an econometric model?
Converting an economic model into an econometric model requires specifying the functional form and addressing unobservable variables.
How do most econometric analyses start?
Since economic modeling is difficult and time-consuming, we usually start by specifying the econometric model. Economic reasoning and common sense guide the choosing of variables. It’s less rich but still effective.
