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0:00
Welcome, everyone. My name
is Alessio Volpicella.
I'm an associate
professor of economics
at the University of Pavia,
and I will guide you
through these short videos
about an introduction
to econometrics.
0:19
Econometrics basically
means blending economics,
data, and statistics.
What we're going to
try to do today is to
motivate why that's useful
with real-world examples,
and we're going
to try to explain
the main goal of
econometrics using data,
using evidence to test
economic theories.
0:47
The basic idea of
econometrics is blending
economic concepts and theory,
data, and statistical tools.
The main goal is to
use data to test
economic theories and quantify
relationships across
any economic variables
you may be interested
in, and the tool to make
economic theories meet data
is exactly statistics.
Let me give you a few examples.
For example, we can wonder
how price affects demand;
whether a fiscal policy
increases employment.
To address those questions,
we need econometrics.
We need the statistics,
data, and economic concepts.
1:40
Now, a very natural
question would be:
Okay, but why do we need
data and statistics?
Why is theory not enough?
What economic theory does is
basically easy to predict.
For example, demand
falls when prices go up.
But then, of course,
we need validation
about what theory predicts,
and that's going to
be about direction.
For example, is it really
true that demand always falls
if prices go up and
if so by how much?
So basically the magnitude.
From that point of
view, data helps
decide among competing
explanations.
For example, does
higher minimum wage
reduce or increase employment?
