ECON2300 Final: ECON2300 Study Guide Final Exams
Document Summary
Econometrics is about how we can use theory and data from economics, business and the social sciences, along with tools from statistics, to answer how much type questions. In economics we express our ideas about relationships between economics variables using the mathematical concept of a function. An example of this is when expressing the price of a house in terms of its size. Hedonic model: a model that decomposes the item being researched into its constituent characteristics, and obtains estimates of the contributory value of each characteristic an example of a hedonic model for house price might be expressed as: Economic theory does not claim to be able to predict the specific behaviour of any individual or firm, but rather is describes the average or systematic behaviour of many individuals for firms. In fact we realise that there will be a random and unpredictable component e that we will call random error. Hence the econometric model for price would be.
