Basic Econometrics-Long.ppt

Basic Econometrics
Dept of Economics & Management
Xi’an Institute of Post and munication
Prof. Long Xiaoyu
11/10/2017
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Chapter 1 Introduction
The qualitative and quantitative relation among various variables
-exact quantitative relations:
a math formulation: Q = f (P)  Q = a + bP;
--where f represent a special relation such as linear or nonlinear,
-- parameters a and b are exact number (especially in natural science fields);
-- also in the mathematical economics
ex. Total cost TC(Q)and marginal cost MC(Q) –
MC(Q)= dTC(Q)/dQ
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Chapter1 Introduction
The qualitative and quantitative relation among various variables
--non-exact quantitative relations:
Q = f (P)  Q = a + bP + ;
--where f may not represent single relation like linear
-- a and b are conditionally exact number,
--The term  represent those condition under which what are the data of Q and P.
ex1. The relation between supply and demand
see textbook: coffee
ex2. e and consume: multi-relation and no exact sole parameters to determine the relation
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Chapter 1 Introduction
The difference between two models
Qt = a + bPt  Qt = a + bPt + t
Causes:
--validity of economic theory.
-- specification errors
--omitted variable errors
-- measurement errors
--irregularity and irrationality in human behavior
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Chapter 1 Introduction
The data
-- Accounting Data
routinely recorded data (that is, records of transactions) as part of market activities.
Most of the data used in econometrics is accounting data.
ings:
it is not collected specifically for the purposes of the econometrician. An econometrician would prefer data collected in experiments or gathered for her.
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Chapter 1 Introduction
The Data
-- Non-experimental
The econometrician does not have any control over non-experimental data. This causes various problems. Econometrics is used to deal with or solve these problems.
ex. Economic and social events are not experimental.
Ch