INTRODUCTION TO ECONOMETRICS

ABIOLA AKANDE, 30/03/2020

Objectives of this module

▪After this module 1, the students should be able to

▪ Understand the nature of econometrics with the regressionanalysis approaches

▪Understand the methodology of econometrics and know howto apply it to socio economic studies social studies andresearch

▪Possess the basic ideas of econometrics models

TOPIC ONE: Advanced treatment of multiple and partial correlation

1. Introduction to Econometrics

2. The assumptions of classical Normal linear regression Model

3. Two-variable regression analysis

4. Practical sessions with Excel, E-views 10 and R (Recommended practical illustration for betterunderstanding)

5. Extensions of regression analysis (Multiple regression, hypothesis testing), Dummy variables, Diagnostictests)

6. Practical sessions with Excel, E-views 10 and R (practical illustration for better understanding)

7. Problems of Estimation

8. Nature and Sources of data for Econometric analysis

9. Simultaneous Equations

10. Practical sessions with Excel, E-views 10 and R (practical illustration for better understanding)

What is Econometrics?

▪ Application of the mathematical statistics to economic data in order to lend empiricalsupport to the economic mathematical models and obtain numerical results

▪ The quantitative analysis of actual economic phenomena based on concurrentdevelopment of theory and observation, related by appropriate methods of inference.

▪ The social science which applies economics, mathematics and statistical inference to theanalysis of economic phenomena.

▪ The empirical determination of economic laws.

▪ A conjunction of economic : theory and actual measurements, using the theory andtechnique of statistical inference as a bridge pier.

▪ Basically, it is the combination of economics, mathematics and statistics. The economicsprovides the economic theory, mathematics allows for the use of mathematical functionsand expression and statistics allows for estimation and tests to carried out.

What is Econometrics?

▪ Economic theory makes statements that makes are mostly qualitative in nature, while econometrics gives empirical content to most economic theory.

▪ Mathematical economics is to express is economic theory in mathematical form without empirical verification of the theory, while econometrics is mainly interested in the later

▪ Economic Statistics is mainly concerned with collecting, processing and presenting economic data. It does not being concerned with using the collected data to test economic theories

▪ Mathematical statistics provides many of tools for economic studies, but econometrics supplies the later with many special methods of quantitative analysis based on economic data

Methodology of Econometrics

Methodology of Econometrics

Methodology of Econometrics

Methodology of Econometrics

▪ Y = Personal consumption expenditure and X = Gross Domestic Product all in billion US Dollars

Methodology of Econometrics

Methodology of Econometrics

Methodology of Econometrics

Methodology of Econometrics

Methodology of Econometrics

QUESTIONS AND

DISCUSSIONS