Saturday, 14 September 2013

need of an economic theory

More than a statistical analysis... Before all that we will do, we need an (or more than one) economic theory (theories). That is true that statistics will always help us, but not will be alone to help. All results can be significant, but unless there is not a connection with an economic theory. 

So, an econometrician may not be a specialist on each economic theory, but at least has to know the recent literature of own research. But, in my opinion, to know a subject is more important than to do numerous analyses without knowing exactly the economic theory behind the research subject. 

It is clear that, while explaining an economic relation, ignoring the economic theory behind this economic relation, is not reasonable. 

Our knowledge about the theory is helpful and guiding about our expectations from our estimations. To know, to interpret and to use our findings, always there exists a need of an economic theory. 


gks


Monday, 2 September 2013

econometrics with a few words

I would like to start with Peter Kennedy's definition, "Economists are people searching in a dark room for a non-existing black cat; econometrician are regularly accused of finding one". Our interrogative pronoun is not "where".. we need a question more detailed, as "how we are far from the black cat, how much do we do mistake when we estimate the location of this cat, etc, etc..."

Sure, i have to talk about other definitions of the econometrics, after the origin of the word "econometrics".
e-con-o-met-rics; means "economic measurement" from its Greek etymological origin. 

Maybe a good definition is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference" from "Report of the Evaluative Committee for Econometrica" of P. A. Samuelson, T. C. Koopmans and J. R. N. Stone (1954).

Imagine a discipline which uses economic theory, mathematical economics, economic statistics, and mathematical statistics... and obtains estimation results. 

These estimations that we use to see the behaviors of our obtained model(s) and to interpret the economic theory. 

Obviously, the aim is not just to see... The importance of the econometrics starts at this point!...We need to see the future, when we are not the astrologists or something... we are not able to do this. 

We need to do the forecasts according to our findings and our model(s). 

Why these forecasts are so important...? To make a decision... And all this story starts from here, only for a decision... From a person's decision to a firm's decision, to a country's decision...

It was just a basic start point or a kind of definition of econometrics... 


gks