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Introduction to
Econometrics
Econometrics and
Quantitative Research
The Statistical Analysis of
Economic (and related)
Data
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Lecturer
Dr. Mohammed I. Migdad
Associate Prof. In Economics
I.U. Gaza
&Institute for Development
Studies (IDS)
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Brief Overview of the
Course
• This course includes definition
and importance of studying the
economic variables, types and
ways of analyzing quantitative
economic data. Differences
between research methodology
and econometric research.
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• It includes also types of
economic models, correlation,
linear and nonlinear regression
both simple and multiple. It also
study econometrics problem
facing simple and multiple
regression.
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‫‪Book name‬‬
‫‪• Koop, Gary (2005) Analysis Of‬‬
‫‪Economic Data, Second Edition,‬‬
‫‪John Wiley & Sons, Ltd.‬‬
‫• مقداد‪ ،‬محمد إبراهيم‪ ، )2009 ( ،‬االقتصاد‬
‫القياسي وتحليل البيانات‪ ،‬ط‪ ،2‬الجامعة‬
‫اإلسالمية – غزة‪ ،‬فلسطين‪.‬‬
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Teaching methods
1.
Lecturing using LCD and the board.
2. Student presentation for topics
3. Case study including data collection
and analysis and discussing results.
4. Home work
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Outputs:
• We aim to enable students to
analyze the economic data in
deep, depending on
econometric models using SPSS
program,
• as well as to defense their
research and analysis results
among group of students.
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evaluation
• Final exam 50%
• Case study, discussion & home
work 50%
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Course teaching plan
First
: Definition,
importance and research
methodology
Second: Types of economic
data
Third : Stages of economic
research
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4. Descriptive analysis and
correlation
5. Discussing the case study for
each student
6. Types of equations using SPSS
7. Simple regression model
8. applications
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9. Multiple regression model
10. Applications
11. Regression with dummy
variables
12. Econometrics problems 1
13. Econometrics problems 2
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14. Logistic regression model
15. Discussing results of the
case study including
interpretation of results
16. Continue discussing
results and interpretation
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Brief Overview of the
Course
• Economics suggests important
relationships, often with policy
implications, but virtually never
suggests quantitative magnitudes of
causal effects.
• What is the quantitative effect of
reducing class size on student
achievement?
• How does another year of education
change earnings?
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• What is the price elasticity of
cigarettes?
• What is the effect on output
growth of a 1% point increase in
interest rates ?
• What is the effect on housing
prices of environmental
improvements?
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From Wikipedia
Econometrics the free
encyclopedia
• Econometrics denrecnoc si
gnipoleved fo sksat eht htiw
ro evitatitnauq gniylppa dna
yduts eht ot sdohtem lacitsitats
cimonoce fo noitadicule dna
cimonoce dna selpicnirp
.smelborp
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Econometrics
• Econometrics combines
economic theory with statistics
to analyze and test economic
relationships, hypothesis and to
study economic problems.
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Theory & Application
• Theoretical econometrics
considers questions about the
statistical properties of
estimators and tests ,
• while applied econometrics is
concerned with the application
of econometric methods to
assess economic theories .
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The start of econometrics
• Although the first know of the
term “econometrics” was use
by Pawel Coimpa in 1910.
• Ranger Frisch is given credit for
coining the tern in the since
that it is used today.
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definition
• Econometrics literally means
'economic measurement'. It is a
combination of mathematical
economics, statistics, economic
statistics and economic theory.
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Definition of Econometrics
• econometrics, technique of economic
analysis that expresses economic theory in
terms of mathematical relationships, and then
tests it empirically through statistical
research.
• Econometrics attempts to develop accurate
economic forecasting and to make possible
successful policy planning.
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Con.
• The term econometrics is generally
attributed to Norwegian economist
Ragnar Frisch, who wrote important
studies on the subject in the mid-20th
cent. and founded the Econometric
Society.
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• In the 1930s econometrics emerged as an
important method of economic study on a
national level, as part of a broad, new field
called macroeconomics.
• In the 1950s economists such as Lawrence
Klein applied Keynesian principles to
econometrics and formed macroeconometric
models of the economy of the United States.
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• Scholars, economists, and public
officials soon followed Klein's lead and
began to use large-scale econometric
models in both historical and planning
analyses.
definitions
• the application of mathematics
and statistics to the study of
economic and financial data.
• and Econometrician is
Someone who studies
economies with a view to
mathematics
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Defin.
• econometric - Combining economics
and mathematics.
• The application of statistical
theories to economic ones for the
purpose of forecasting future trends.
• A branch of statistics that deals with
the time series data common in
economics and finance....more on
Econometrics.
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Defin.
• The analysis of economic systems
containing supply and demand data
using statistical models.
• Mathematical computerized models
used to illustrate the relationship
between key economic conditions
such as employment rates, interest
rates, and between GDP and factors
affecting it.
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Application of Ecotrics
• econometric - methods are
applied in economics, finance,
marketing ,criminology,
operations research,
climatology, geography,
psychology ,medicine
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Importance of Econometrics
1. To examine the statistical and
economic hypothesis.
2. To provide a statistical method
to analyze the economic data
rather than the traditional
descriptive method.
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importance
3. It help in drawing and
implementing the economic
policies
4. Econometrics helps in using
the scientific research in
forecasting.
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Importance
5. It make the use of computer in
analyzing data is easy,
especially to find relation
between more than 3
variables.
6. It help to find exact numeric
results depending on deep
analysis.
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Objectives of Econometrics
Econometric research has
different objectives:
1. Establishing applied economic
models, in a testable and
realistic form.
2. To chose the best alternative
among theories that is suitable
to the case.
Objectives
3. Test and estimate economic
models using empirical data to
estimate constant (estimators) of
the equation and calculate
variables.
4. It helps in using models in
forecasting and policy
implications.
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What are Models
• A statistical model is a set of
mathematical equations which
describe the behavior of an object
of study in terms of random
variables and their associated
probability distributions.
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Cont.
• If the model has only one equation
it is called a single-equation model,
whereas if it has more than one
equation, it is known as a multipleequation model.
Simple Models
• Many scientists have argued in
favor of simplicity, because
simple models is easier to
understand, communicate and
test empirically with data. This
is the position of Milton
friedman and karl popper.
S. Models
The choice of a simple model to
explain the complex realworld phenomena leads to
two criticisms:
1. The model is over simplified.
2. The assumptions are
unrealistic.
Quantitative analysis
• Quantitative analysis id the use
of numbers and equations in
analyzing social sciences.
• It use equations to find the
relations between dependant
and independent variables to
test different hypothesis.
Econometrics and research
• We consider econometrics as
the quantitative research
methodology in economics and
other sciences using numeric
data and equations.
• So econometrics is a scientific
quantitative deep research and
analysis.
Deep analysis
• Is a type of analysis that use
numeric data and models in
analyzing economic
phenomena.
• It is not a descriptive or
qualitative analysis but a
quantitative one
Quantitative and
qualitative research
• In economic problems, economists
traditionally used the qualitative
research due to the nature of the
economic issues.
• But later on, and after the
econometrics society foundation,
they start to use quantitative
methods in analyzing economic
problems.
quantitative research
and economics
• Do you thing quantitative
research is suitable for
economic and social science?
• Or the descriptive analysis is
more suitable?
Why?
• We accept that the deep
quantitative analysis is very
important and suitable for the
social and economic sciences?
• That’s because it use numeric
and empirical data and can test
theories & hypothesis, and it is
a good forecasting method.