Welcome to my page dedicated solely to the science of Econometrics. Over here I plan to explain econometrics in simple language for all who do not know or are struggling to make sense of it.Please keep checking back for updates!
What is econometics? As most books on the subject will explain in their introductions, Econometrics is trying to prove economic theory by applying statistics to it. Do not be daunted when you first start studying the subject. Remember that if it was easy everyone would be doing it. Econometrics is actually quite practical. One important use of Econometrics is in forming links and trying to decipher trends. For example a business firm can use Econometrics to try an predict future sales by analyzing data relating to household income over the years.
We call the data that we are investigating variables. There are independent and dependent variables. Income is an independent variable and consumption of good X is a dependent varaible. This is because consumption DEPENDS on a persons income.