Pioneered by Ragnar Frisch, Lawrence Klein and Simon Kuznets, econometrics is the application of statistical models to economic data to develop both new theories and test existing hypotheses - a division which demarcates its two main branches: theoretical and applied. Its aim is the quantitative analysis of economic phenomena; giving empirical content to economic relationships. Or in other words, analysing economic history and making forecasts.
Relatively self-explanatory, theoretical econometrics prepares and tests the methods that are later applied to real-life data - it’s intensely maths-heavy. Key to this process is the search for ‘estimators’ - desirably unbiased, efficient and consistent - whose suitability are rigorously tested under certain mathematical conditions.
The applied branch of econometrics typically focuses on consumer behavior and predictive models that attempt to anticipate how - to put it incredibly simply - something will be affected by changes in something else. This may include the study of: the relationship between income levels and consumption; and advertising expenditure vis-à-vis product sales. To establish the strength of association, if, of course, there is one, econometricians employ trusty tools like the multiple linear regression model.
How to Apply to a Summer School: Selecting, Applying and Getting In
Over the past few weeks we’ve posted lists of Top Summer Schools in Economics and Top Summer Schools in Business and Management. While we are happy to promote the many great programs out there, we also understand that wading through the sea of options might leave you feeling a little overwhelmed.
Is it time to bin GDP?
Gross Domestic Product, or GDP, is the sum of all goods and services that a country produces in a given year, adjusted - to make it comparable to previous years - for inflation. In many ways, though, it has become much more than that. It has become the barometer of a country’s progress, an indicator of a land’s prosperity, and the ultimate yardstick for assessing living standards. Some have even gone as far as describing it as 'the statistic to end all statistics'. When growing (at expected rates), politicians refer to it as proof of the success of their policies.
Top Master's Programs in Economics
Choosing your master's program is a big decision – with so many courses available, how can you find the right one for you? We're here to help by sharing a selection of great master's programs that you can find on INOMICS.