I.1 WHAT IS ECONOMETRICS?
Literally interpreted,
econometrics
means “economic measurement.” Al-
though measurement is an important part of econometrics, the scope of
econometrics is much broader, as can be seen from the following quotations:
Econometrics, the result of a certain outlook on the role of economics, consists of
the application of mathematical statistics to economic data to lend empirical sup-
port to the models constructed by mathematical economics and to obtain
numerical results.
1
. . . econometrics may be defined as the quantitative analysis of actual economic
phenomena based on the concurrent development of theory and observation, re-
lated by appropriate methods of inference.
2
Econometrics may be defined as the social science in which the tools of economic
theory, mathematics, and statistical inference are applied to the analysis of eco-
nomic phenomena.
3
Econometrics is concerned with the empirical determination of economic
laws.