Econometrics is important — it is used constantly in business, finance, economics, government, consulting and many other fields. Econometric models are used routinely for tasks ranging from data description to policy analysis, and ultimately they guide many important decisions. To develop a feel for the tremendous diversity of econometric applications, let’s explore some of the areas where …
The unifying methodology of modern econometrics was articulated by Trygve Haavelmo (1911- 1999) of Norway, winner of the 1989 Nobel Memorial Prize in Economic Sciences, in his seminal paper “The probability approach in econometrics”, Econometrica (1944). Haavelmo argued that quantitative economic models must necessarily be probability models (by which today we would mean stochastic). Determ…