Principles of Econometrics: A Modern Approach Using Eviews by Sankar Kumar Bhaumik

Excerpt

There are different situations where theory and data confront each other. These include establishment of the empirical relevance of a theory, providing theoretical explanations for observed data regularities and performance evaluation and forecasts for corporates and policy-makers (Stigum 2003). Spanos (2007) suggests that “Philosophy of econometrics is concerned with the systematic (meta-)study of general principles, strategies and philosophical presuppositions that underlie empirical modeling with a view to evaluate their effectiveness in achieving the primary objective of ‘learning from data’ about economic phenomena of interest”. Given this backdrop, one can probably enlist the following objectives of an introductory econometrics textbook: First of all, it should introduce basic concepts to provide an intuitive understanding of the theory. Secondly, it should provide the foundation for empirical analysis. Finally, it should enable students and early researchers to think analytically. In this context, Zellner (2007) emphasizes the role of “deduction, induction and reduction in economic research” in teaching. …