lecture 2 - Theory vs Empirics

Question 1

what are Economic theories/models are about?

Answer 1

how we think the world works.
choices that economic agents make to maximise well-being, subject to constraints they have
-typically use a variety of simplifying assumptions
-helps organise thinking about economic relationships such as incentives

Question 2

what do theories give

Answer 2

Theory can give hypotheses of relationships between economic variables.

Question 3

what does data help with

Answer 3

Data can help see if these relationships exist

Question 4

what is time sequence data

Answer 4

Sequence of measurements of same variable at different points in time

Question 5

what is Cross section Data

Answer 5

Cross section Data
Record at a point in time the way an economic variable differs across different individuals or groups of individuals

Question 6

what is panel data

Answer 6

Record observations over multiple time periods for the same individual or group of individuals

Question 7

what is scatter diagrams

Answer 7

Relationship between two variables plotted in diagram.
Can fit a line to summarise relationship between the variables

Question 8

definition is ceteris paribus

Answer 8

things equal / holding all other things constant

Question 9

what is positive economics

Answer 9

Positive economics are the study of objective or scientific explanation of how the economy works or how many economic actors behave.

Question 10

what is normative economics

Answer 10

Normative economics is the economic analysis and proscription of policies based on value judgement. It offers a judgement of whether or not a policy is bad or good.