The object of study starting from the science of economics is dedicated to explain and predict economic phenomena, through the use of applied mathematical and statistical science to apply them in estimation of reflected models or enumerate many variables in matrix form, because within from the economic world you intervene, many variables, example, coffee market price, unemployment inflation, GDP, gross territorial product, income per capital, price of coffee seed, it is thought that all the variable that is difficult to study all at the same time, but if you can study everything based on one, you also have to consider the statesman of each, minimum as a year to see the behavior of each. That is why econometrics is an economic measurement, to the data of economic phenomena, to give empirical support to the models constructed by mathematical economics and obtain numerical results. Econometrics
For the above mentioned econometrics is to find a set of assumptions, specific and realistic enough to allow you to take advantage of the best way the data that account. Study models
The research method.
The method of econometric research seeks in essence a conjunction between economic theory and real measurement, with the theory and technique of statistical inference as a bridge, with the help of economic statistics is related in the first place to the collection, processing and presentation of economic figures in the form of graphs and tables.
Methodology of econometrics.
The classical methodology is maintained, which still predominates in empirical research in economics and social and behavioral sciences. It establishes hypostasis, then creates mathematical models, to make the relevant estimations of the case of validating the hypothesis.
Currently they have tried to explain this economic science to try to make it more understandable, due to the phenomenon of globalization, create new economic trends, which are more operational, there are already econometric programs that determine the projections of the variables, with the use of statistical data to see certainty, with confidence levels of 90% and 95% of the phenomena that occur. Method of least squares (OLS).
Example of econometric models.
Specification of the mathematical model of consumption. Despite having postulated a positive relationship between consumption and income, Keynes does not specify the precise form of the functional relationship between both. For simplicity, a mathematical economist can propose the following form of the Keynesian consumption function:Y β1 + β2X 0 <β2 <1 (I.3.1)
Where Y = consumption expenditure and X = income, and where β1 and β2, known as the model parameters, are, respectively, the coefficients of the intercept and the slope.
The coefficient of the slope β2 measures the PMC. In Figure I.1, it is presented geometrically
The equation (I.3.1). This equation states that consumption is linearly related to income, and is an example of a mathematical model of the relationship between consumption and income, called in economy function consumption. A model is simply a set of mathematical equations. If the model has a single equation, as in the previous example, it is called a single-equation model, whereas if it has more than one equation, it is known as a multi-equation model (we will consider this type of models later).
Source taken from the text of Damodar n. Gujarati, Dawnc. Porter, 'Econometria'.In equation (I.3.1), the variable that appears on the left side of the equality sign is called the dependent variable, and the variable (s) on the right hand side is called (n) independent variable (s) (s) ), or explanatory (s). Thus, in the Keynesian consumption function, the equation
(I.3.1), consumption (expense) is the dependent variable, and income, the explanatory one. Damodar text citation n. Gujarati, Dawnc. Porter, 'Econometria'.
I conclude with the following the importance of econometrics, for a country, finance, large organization, large decisions are usually taken in an environment of uncertainty, but always based on studies and subsequent assumptions that allow the creation of strategies, for to be able to know the trend that is favorable for the economic world, through which all the information is processed, giving importance to the variables that the analyst is most interested in.
It is about looking for the greatest possible prediction to see the behavior of the variables that we want to analyze. However, these models must be contrasted with the available data to know if they have explanatory and predictive capacity, and can, in short, make a decision based on them, since the economy covers the economic and social impact, to determine the development, and a better strategy in making decisions in the economic reality, most of the context was addressed and supported by Damodar's theory n. Gujarati, Dawnc. Porter, 'Econometria'.
