Models and Data Flashcards
quality demanded is a function of …
price and income
Qd = f(P, I)
consumption function model - deterministic
Ct = a + bYt
C = real consumer spending
Y = real personal disposable income
t = a time subscript
consumption function model - stochastic
Ct = a + bYt + ut
C = real consumer spending
Y = real personal disposable income
t = a time subscript
u = random error term (captures unobserved influences including excluded variables which cannot be observed)
types of economic data
-time series
-cross section
-cross section/ time series = pooled cross section
-panel data
time series data
observations of a variable or several variables over time
time series data examples
stock prices, money supply, consumer price index, gross domestic product, annual homicide rates, automobile sales, etc
typical features of time series data
trends, seasonality and cycles
typical applications of time series data
applied macroeconomics and finance
cross section data examples
sample of individuals, households, firms, cities, states, countries, or other units of interest at a given point of time/in a given period
cross section data
data collected at a single point in time or very short period of time
typical application of cross section data
applied microeconomics
pooled cross section data
two or more cross sections combined in one data set
cross sections are drawn independently of one another
what is a pooled cross section often used for
often used to evaluate policy changes
examples of pooled cross section application
-evaluate effect of changing property taxes on house prices
-random sample of house prices for the year 1993
-a new random sample of house prices for the year 1995
panel/ longitudinal data
the same cross sectional units are followed over time
panel data have a cross sectional and time series dimension
