what are the major use of econometric? Why do we choose the regression model but no...

what are the major use of econometric? Why do we choose the regression model but no other statistics analysis?

Expert Solution

The following are the some of the major use of econometric :

(1.) Forecasting: Forecasting is considered as one of the major use of econometric. With the help of forecasting we can predict / forecast about the future trend for a particular variable, based upon the existing available data of that variable. In economics very common use of Forecasting is to predict the future demand and prices of different commodities. It help most of the firm to adjust their production capacity according to the possible future trends.

(2.) Hypothesis Testing: In Hypothesis Testing, we use the subset of population to estimate the particular claim about population parameter values like check particular claim about difference of mean values or equality of mean values and difference of variance or equality of variance.

(3.) checking validity of various economic theories: Checking validity of various economic theories is another major use of econometric. In economic theories we know the relationship between various variables like how price of a good, price of related goods, Income of consumer and taste and preferences are related with each other and how they affect demand for a product. In econometric we use the available on these variables to checking validity of various economic theories.

Regression model is much more superior than other statistics analysis. Regression model is supported by the various economic theories, which make the difference between Regression model and other statistics analysis. e.g As we know the concept of law of demand. By using the Regression model, we can available data on price of a good, price of related goods, Income of consumer and taste and preference to estimate the effect on demand.

Actually, On the one hand, In Regression model we use the data as well as the concept of various economic theories to use in statistical analysis. and

on the other hand, other method only uses available data to perform statistical analysis.

Rahul Sunny answered 1 year ago

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