Login with Facebook

Introduction to Econometric Data

It is hard to imagine an economy without econometrics. Economic studies and decisions all depend on data for the best outcome. After all, human beings, and indeed, the whole world is rational. Without data and information, there is no way they can make decisions. In this case, both firms and individuals are faced with decision making challenges on a daily basis. And these decisions bring out the relationship between the two. For instance, if producing a particular product goes high, a manufacturer may be forced to increase the price or reduce the quantity to cater to the extra expenses. The consumer may be forced to abandon the product or adjust its budget to fit the new prices.

In other words, everything in the world is tied together. We all depend on each, in a proper economic ecosystem. Therefore, it is important to understand that every decision we make affects other people either directly or indirectly. The economic relationship must exist for and economy to grow and develop.

Econometrics a branch of economics that deals with economic relationships. It is the bridge between mathematical economics and statistics, aiming to offer numerical values to the parameters that define economic relationships. And to achieve this, it becomes critical to look at the existence of economic theories and models with the aim of gaining values of the parameters, or the coefficients of a mathematical approach to economic relationships. In other words, econometrics deals a lot with numbers and things that can be proven numerically from an economic perspective. Econometric relations are important because they show the random behavior of economic relationships that are seen as mathematical formulas.

Econometrics is all about finding using numbers to create a foundation for economic decisions. For this reason, there is a need to have data that can be verified. Note that econometric methods can be used in other areas like engineering sciences, biological science, geosciences, agricultural science, and many other areas. As long as there is a need for data, econometric methods will be applied. Whenever one needs to find the scholastic link using mathematical formats, they will always be bound to econometric methods and tools.

But nothing will happen in this field if there is not data. You may have noticed that many people use the terms statistics and probability when defining econometrics. Even though these terms are different in definition, statistics is a very vital aspect of econometrics. Therefore, we say that econometrics helps us top understand why consumers will behave in a certain way if the producer makes certain decisions. It is this relationship that truly defines an economy. If people refuse to consume a particular product, they will be forcing companies that make that product out of the market, which contributes to market failures. An economy cannot survive without markets, which is why there are fiscal and monetary policies that control these ideas.

Data and econometrics

Economic data is also economic statistics, which refers to the quantitative measures that describe an actual economy in the past or present. Hence, the data is usually found in time-series format, meaning it covers more than one period of time. Data can also be cross-sectional in a specific period, for instance, the consumption and income levels of specific households within and economic period. Also, data can be collected from surveys, of chosen individuals and firms, or aggregated to sectors within a single, or international economy. Proper data collection methods are necessary for determining the correct outcomes.

Economic statistics has become one of the most important crucial aspects of modern economies. When there is a problem causing a burble of a recession in the economy, the policymakers have to go back and analyze the reasons behind such changes. Once they establish why, they will need to come up with a more probable cause of action, which depends on their ability to use available data. In other words, economies will be crippled if there are no verifiable data sets to set the records straight. It becomes essential to go back to the field to collect information that can be applied effectively in the development of a solution. For instance, a country may decide to analyze the rate of unemployment in the past, say five years, which could have had a huge impact on economic development. They will have to look at existing data, reasons that cause it, and make sure they do not go beyond the estimated limits. Government decisions, such as knowing where to invest, depend on their ability to understand consumption patterns over time.

Methodological and statistical elements for economic data include measuring, collecting, analyzing, and publishing the data. Hence, economic statistics can also be referred to as a subtopic of official statistics given by an official body. In other words, statistical institutes, an intergovernmental organization like the UN, and EU, Central banks, ministries, and many other similar bodies collect and store data that can offer an empirical foundation for economic research. Note that the research can be carried out in a descriptive or otherwise and econometric manner, but it must still remain relevant to the research process. Data archives have been years for many years in assessing replicability in empirical findings. They have been very fundamental in decision making as well as designing economic policy. In other words, data is the backbone of economic development, and it offers the best way to understanding why certain groups of individuals of firms will behave in a specific manner.

At any given economic level, you will find a huge array of organized economic data compiled according to national accounting. For instance, you will find Gross National Product and its components, Gross National Expenditure, Gross National Income, among others within the National Incomes and Product Accounts. It can be referred back to when looking at certain behaviors that influenced specific direction to a chosen economy, helping to come up with proper decisions to mitigate further damages. Other data such as capital stock and national wealth is all part of ensuring there is somewhere to turn to when things are not working as expected within an economic system.

Econometrics and statistics

It is important to note the difference between mathematical statistics and economic statistics. This is one subject that has confused many people who think there is a direct link between the two. Even though statistics sound the same all around – it is all about numbers and data – specific approaches bring out important differences when applied in different fields. For example, economic statistics call for collecting, recording, and tabulating empirical data, which is then used to describe how they develop. The statistics of economics describes economics. It does not explain why or how the development of different variable occurs, or the measurements of determinants in the relation.

The statistical methodology offers the description of measurement, builds on the foundation of a controlled experiment. These methods may be false in an economic phenomenon because they don't fit in the framework of controlled findings. Consider real-world experiments; for instance, the variables are never constant. They keep changing continuously and simultaneously, which means using controlled experiments may not keep the most accurate results.

It is safe to say that econometrics does not have a specific approach with statistical methods. It will only use the methods after changing them to adapt to the current issue in an economic environment. And one of the statistical methods have been adopted, they become econometric methods, which are adjusted constantly according to the measurement of stochastic relationships necessary. Once adjusted, the methods will attempt to specify the stochastic aspect that works in real-world data and inserts it into the determinant of discovered information. In this case, data becomes a random sample critical to the use of statistical parameters.

There is also the aspect of theoretical econometrics, which includes the construction and development of the right methods for measuring economic relations, not meant for investigation under controlled environments, like laboratories. Econometric methods generally emerge from non-experimental data.

In applied econometrics, there is the use of econometric approaches to particular branches of economic theory. Experts can also use it in resolving problems like demand, supply, production, investment, and consumption, among others. Applied econometrics, like the name suggests, comes with the application of parameters of the econometric model when analyzing economic model and trying to predict economic behaviors. Thus, they are crucial to economic growth and development both in the short-run and in the long-run.

Types of data in econometrics

As seen above, data is the backbone of any economy that seeks to grow and develop. Without it, there is no way of understanding what is happening at the moment or what may happen next – which leads to poor decision making. It is critical for data to be made available to anyone who needs it, especially since we live in an economic era. And in this case, here are various types of data used in estimating the econometric model.

Time-series data

Sometimes there is a need to look at different variables in a specific economy over a given period. This is where time-series data comes into play. It is described as the data that provides information about the numerical values of variables from period to period. This data is collected over time because it compares economic parameters over a long period. For instance, one may seek to find out monthly income for specified works in a certain sector between 1989 and 2012. Within the period, there would have been several downs and ups in the economy that caused specific changes that may have occurred within the parameter.

Cross-sectional data

Whereas time series data is general, cross-sectional data comes down to individual elements. It is data that provides information on variables about individual agents, like consumers and products, at a specific point in time. A good example is a cross-section of consumers where a sample of family budget indication expenditure of various commodities is shown. For instance, it could show how family expenditure and household consumption changed during the 2008/2009 great recession. Such data could also include information on family income, family composition, and other demographic, social, and financial behaviors. Since individuals' decisions affect the outcome of an economy, it becomes crucial for such data to be verifiable.

Panel data

We have seen the difference between cross-sectional and time-series data in the example above. Some people get confused when looking for panel data because there is both time and individual parameters involved. However, it is crucial to note that panel data is that data that comes from a repeated survey of a single sample in different time periods. For instance, one could be surveying the income ratio (cross-section data), or workers in the automobile industry. If they take a sample between 1907 and 1915 and compare to say data between 2010 and 2015, it becomes panel data.

Dummy variable data

Sometimes qualitative data is used in research. In this case, the variables cannot be quantified, yet the data is necessary; hence it is recorded as an indicator function. The values of the variables do not show the magnitude of the data. Such research is only intended to show the presents or absence of a particular trait. For instance, parameters like religions, tastes, and similar things are considered variables because they cannot be counted. If you are working on 'sex' are your subject, for instance, you can only get male or female. And if you go with 'taste' is either values-like or dislike. These values are denoted by the dummy variable where '1' may represent male or value-like, and '0,' female of dislike of taste.  

Conclusion

Data is all around. It is the force that drives human decisions and ensures economic growth and sustainability. This is why studying economic statistics is crucial in modern economies. However, this is one of the most challenging subjects because it includes statistical analysis of economic data. HereEconometric Data, students will be exposed to the combination of probability and statistical theory with computer-based analysis. But it is also very interesting because students test economic models using real-life information. You also get the skills to develop your own hypotheses and use them to prove certain aspects of human-like concerning their economic issues.

Author: James Hamilton


Comments

Need a custom
essay?

We will write it for you.
Order now

Free Essay Examples

Free essays:

An insight into the error-correction models
All you need to know about management discipline?
A historical overview of Financial Crises
All you need to know about reaction kinetics?
Basics the Game Theory in Cryptoeconomics
Business innovation ideas for making money
Biosensors for cancer diagnosis
Business Analysis: Pricing strategies and Demand Curve
Contracting with Moral Hazard and Adverse Selection
Conflict management in an organization
Can social media help overcome the problem of illiteracy?
Cultural heritage of indigenous people.
Digital Illiteracy
Determinants of business cycles fluctuations
Determinants of Unemployment and Inflation
Different tissues of the body
Economic Analysis of Market Structure
Expected Utility
Everything you need to know about workplace diversity
Efficiency and Market Equilibrium
Factors Affecting Purchasing Behavior
Financial Statement Analysis
Factors Influencing Interest and Exchange Rates
Fiscal and Monetary Policies in Response to 2008/2009
Game theory in microeconomics
Globalization: definition, causes, social impact and risks
Gene expression: what it is and why it is important
Global environmental issues
How to conduct economic research?
How to define the Enterprise Value
How cancer is developed - Cancer biology
How can financial illiteracy harm you?
Illiteracy in the USA
Importance and seven principles of quality management
Intermediaries and Government in Financial Crisis
Introduction to Econometric Application
Journalism: What is News?
Journalism: Broadcast media and Television Presenters
Journalism: Sources of News
Journalism and Law
Key Determinants of National Income
Key Factors That Affect Pricing Decisions
Kinetic models in biology and Related fields
Know about the different forms of traditional African dances
Latest technology trends
Latest dance trends
Methods of labeling of nucleic acid that enable their detection
Macroeconomics: International Economic Issues
Neuromuscular disorders
National Economies, Fluctuation, and Responses to Fluctuations
Neurotransmitters: what they are and different types
Nanomedicines to target tumors
Organizational motivation and its effects
Overcoming Hiring Challenges for Nonprofit Organization
Protection of cultural heritage in times of war and peace.
Principles of Corporate Governance.
Risk Sharing in Insurance and Asset Markets
Risk and the value of information
Reverse discrimination.
Role of media in wartime.
Segregation in the US.
Stages of the Consumer Decision-Making Process
Structure and function of blood vessels
Skills in Journalism: Effective Interview
Theories of Public Policy
The Economics of Uncertainty – Introduction
The different medical imaging techniques
Tips for labeling medical devices- Medical Entrepreneurship
Understanding Auctions and Auction Theory: Part 2
Understanding Auctions and Auction Theory: Part 1
Use of Machine Learning in Econometrics
Understanding Public Policy
Various theoretical perspectives of sociology
Virtual reality, what it is and how it works
What is Immune System and Immunotherapy?
What are the methods of valuation of companies?
4 Facts about Origin of Mathematics!
5 techniques to create an animation
10 emerging technologies according to World Economic Forum
10 strategies to maximize corporate profits
3d Model Of Building
6 Medical Technologies that revolutionized the healthcare in 2020
All you need to know about the ACA Code of ethics
Architecture and Democracy: An Introduction
Architecture and Democracy: Democratic Values
Architecture and Democracy: Democratic Procedures
All You Need to Know About a Synthesis Essay
An essential guide to understanding Film Theory
Application of Artificial Intelligence in Cyber Security
Applications of electrical engineering
Augmented reality: what it is, how it works, examples
Advantages And Disadvantages Of Social Networking
All you need to know about Cryptography
Applications of astrophysical science
All you need to know about architecture engineering
Applications of geological engineering
Artificial intelligence and medicine: an increasingly close relationship
An insight into Computational Biology
ACA code of conduct
A Rose for Emily
Applications of Mathematics in daily life
Architecture mistakes to avoid
All you need to know about Toxicology
All you need to know about Holistic Medicine
All you need to know about linguistics
An introduction to Linguistics and its subfields
All you need to know about Anxiety disorder
All you need to know about Drones
A Brief Insight into Political Science
Assumptions related to feminism
All you need to know about Byzantine emperors
All you need to know about labour economics
An insight into xenobots -the first-ever robots
An ultimate guide about Biomaterials
A Comprehensive Introduction to the Mona Lisa
Analysis methods of Transport through biological membranes
An ultimate guide about biochemical reactions
Analysis of brain signals
Artificial Gene Synthesis
Application to synthetic biology of CAD methods
All you need to know about metabolic pathways
Applications of BIOMEMS
All you need to know about the epidemiology
Asian vs. western leadership styles
All you need to know about Smart prosthesis
Analysis of Economy: Output of Goods and Services (GNP), and GDP on Economic success
A Guide to Pricing Strategies
An Overview Of Economic Studies
Analysis of Fiscal and Monetary Policies
Analysis of Business Cycles
Analysis of Consumption and Investment
A Look into Regression Analysis
Analysis of Household's Consumption and Savings Behavior
All you need to know about Capital Budgeting
All you need to know about risk management
Art looted in wartime.
Appropriate use of Data in Economics
All you need to know about reaction kinetics?
A historical overview of Financial Crises
All you need to know about management discipline?
An insight into the error-correction models
How to Write a Personal Essay
Housing Needs in America
How to Write a Description Essay
How to Create an Excellent Scholarship Essay?
How to write a cause and effect essay
How to Hire the Best Essay Writing Service Provider?
How to Write a College Application Essay?
How to get the most out of your English lectures
How to write Expository Essay
How to succeed in your psychology class?
How to Write an Academic Essay in the Shortest Time?
History of Journalism
How Different Sectors are Using Artificial intelligence (AI)
How to write an informative essay
How to deliver persuasive essays?
How to Give a Convincing Presentation
How to write an essay on leadership?
Historical Art Still Around Today
Humanoid robot: what it is, how it works and price
History of Chemistry
Healthcare Advanced Computer Power: Robotics, Medical Imaging, and More
Healthcare AI: Game Changers for Medical Decision-Making and Remote Patient Monitoring
How to understand different types of English
How to Cope with Chronic Pain
How African American choreographers and dancers have influenced American dance
How mobile robot can do in logistics or in production
How To Become a Successful Entrepreneur
History of the Philosophy of Feminism
How is the climate changing?
How to Track Your Content Marketing ROI
How to Gun control In the USA?
Historical and contemporary role of labour in the modern world
How breast cancers are classified?
How the cells of our body communicate?
How the Lymphatic System Works?
How Digestive System Works
How to complete your capstone projects effectively?
How to write a research project
Healthcare technologies that help patients with better self-management
How to choose the topic of the senior capstone project
How to make your business survive at economic crisis
How can immigrants blend in the American society?
How does the economics of war affect society?
Hate speech on social media.
How to Build an Economic Model
How to start a healthcare startup?
How can financial illiteracy harm you?
How cancer is developed - Cancer biology
How to define the Enterprise Value
How to conduct economic research?
Introduction to Urban Studies
Importance of dance in education
InMoov: how to build an open source humanoid robot
Importance of KYC verification to making the Blockchain secure
Importance of Rhythm
Importance of dance student evaluation
I/O control methods -types and explanations
Identity theft: what to do?
Introduction to Utilitarianism
Importance of 3d Modelling in Architecture
Importance of online journalism
Image processing in medical diagnosis
Introduction to USA Politics
Introduction to Comparative Politics
International Relations as a Major in Political Science
Importance of modern trade policy
Introduction to Journalism
Introduction to Writing a TV Script
Introduction of Microfabrication techniques
Introduction to Microeconomics
Interaction of Consumer and Firm Choices in Markets
Importance of corporate sustainability
Issues in International Monetary Macroeconomics
Introduction to Statistics and Data for Economics
Introduction to Data and Probability for Economics
Introduction to the Game Theory
Introduction to Econometrics
Introduction to Economic Information
Introduction to Market Equilibrium
Introduction to Economic Models and Application
Introduction to Empirical Research
Introduction to Econometric Data
Importance of Critical Thinking, Principles, and Goals
Introduction to Identification and Causal inferences
Introduction to Econometric Application
Intermediaries and Government in Financial Crisis
Importance and seven principles of quality management
Illiteracy in the USA
The Looming Energy Crisis in America
Top benefits of performance-based engineering
The More Languages You Know, The More Times You Are a Man
Things to consider while writing an Argumentative Essay
Top Ways to Improve Your Academic Writing Skills
Tips to Excel in Creative Writing
The origins of films in the early 19th century
Top career options in Architecture
The Elevator Pitch
Top finance trends 2020
The basic Structure and functionality of robots
The Way to Success
The election system of the President in the United States of America
Two-party System in United States of America
Top trends in urban design
The history and theory of African American filmmaking
Top benefits of creative writing
Tinnitus Guide: Common Symptoms and Treatment Options
The language of dance
The digital image processing management
Top famous politicians of the World
Top methods of political science!
The history of the feminist movement
The blood flow in cardiovascular system - Biofluid Mechanics
The best of Leonardo Da Vinci
The Structure and Function of Macromolecules
The structure of cell: a research on the bricks of the human body!
Tissue and organ construction: Adhesion and recognition between cells
The kinetics of the transformation processes
The Modeling of Biological Systems
Tips for writing a great thesis statement
The Defense mechanisms against infections
The impact of the technological innovations in medicine
Top journalism trends to know about
The relation between mass media & politics
Theranostics: Diagnosis and Care through Nanoparticles
The practical Applications of X-rays
The applications of Ultrasound in medicine
Transfer mechanisms of genetic information in Bacteria
The regulation of cellular metabolism in the diagnosis
The Principles of MRI Contrast agents
The technical basis of optical coherence imaging
The New Media: Emerging Trends
The Structure of Interest Rates and the Yield Curve
Technological perspectives and reflections of neural engineering
Types of bioreactors and their applications
The Role of Government Policy in Improving Economic Outcomes
Types of corporate responsibility
The Role of IMF in International Monetary Macroeconomics
Tools for investment decision making
The concept of Organizational Culture and its applications
The Conduct of Monetary and Fiscal Policy
The Basics of Financial Accelerator Models
Tips for labeling medical devices- Medical Entrepreneurship
The different medical imaging techniques
The Economics of Uncertainty – Introduction
Theories of Public Policy
What is a Definition Essay?
What are diagnostic essays?
What is the relation between art structural engineering?
What is a Narrative Essay
What are robotics and intelligence systems?
What are the benefits of studying health sciences?
What is artificial intelligence and why it matters?
What is comparative Literature?
Why study neuroscience
What is Wi-Fi and how does it works
What is French history famous for?
What are Humanistic Studies?
What is covered in Biophysics?
What is modern journalism?
What is Virtualization? Benefits & Applications
What are modern public relations?
What is plasma physics?
What is teacher preparation?
What is rapid prototyping for 3D printing?
What is contemporary European Politics?
Why should you learn American Ballet?
What is engineering physics?
What is the purpose of African American Literature?
Ways to learn the Rhythm
What is digital art used for?
What are Enzymes and how do they work
Who is the father of political science?
Why Study Political Science - Job?
What is the Philosophy of Feminism?
What is a quantum computer?
Ways B2B Startups Streamline Their Conversion Strategies
Why do biomedical signals need processing?
What are the long term effects of climate change?
Why study labour relations
What is Holoprosencephaly?
What is antisocial disorder?
What are the important principles of evolution?
What is the cytoplasm and its function?
What is biopolymers?
What Makes a Good Leader
Women empowerment in modern generation
What is the history of political thought?
What is Gene recombination
What is synthetic biology
What is business cost analysis?
What is Inflation
What are the consequences of unemployment?
What is lithotripsy and its types?
What is transition elastography?
What is the purpose of deep brain stimulation?
What is a Brain-Computer Interface (BCI)
What is neuroethics?
What is Market and Supply and Demand
What is optogenetics?
What are the techniques to record brain activity?
What happens if the interest rate increases?
What is immunotherapy?
What is the economic role of the financial market?
What are the factors behind illegal immigration?
What is the lymphocyte activation?
What is financial market and its types?
What is the structure of financial markets?
What are the methods of measuring business performance?
What is the Credit market?
What is business ethics and code of ethics
What are the Causes of financial instability?
What is MBA with Concentrations
What is regenerative medicine?
What is Population ecology?
What is Microfinance: evolution, and practices?
What is biotechnology and its applications?
What are Workplace diversity and its benefits?
What is the difference between a leader and a manager?
What Is Branding and best branding Business strategies?
Why are microelectronics important?
What are biologic drugs.
What is the Foreign Exchange market?
What is the role of scientific research in times of crisis?
What are the risks of international trade?
What is financial management?
What is gene therapy?
What is education economics?
What is regression analysis, and why should you use it?
What Is Technology Marketing And How Should It Work?
What is Management Accounting
What are the methods of valuation of companies?
What is Immune System and Immunotherapy?