INTRODUCTION TO ECONOMETRICS II ECO 306 NOUN 125
UNIT 3: ECONOMETRIC MODELLING AND MODEL USING TIME-SERIES DATA CONTENTS 4.3.1.0 Introduction
4.3.2.0 Objectives
4.3.3.0
Main Content 4.3.3.1 The Adaptive Expectations Model
4.3.4.0 Summary
4.3.5.0
Conclusion 4.3.6.0 Tutor-Marked Assignment
4.3.7.0 References/Further Reading
4.3.1.0 INTRODUCTION The modelling of expectations using time series data is often an important and difficult task of the applied economist. This is especially true in macroeconomics, in that investment, saving, and the demand for assets are all sensitive to expectations about the future. Unfortunately, there is no satisfactory way of measuring expectations directly for macroeconomic purposes. Consequently, macroeconomic models tend not to give particularly
accurate forecasts, and this makes economic management difficult.
4.3.2.0 OBJECTIVE The main objective of this unit is to introduce the application of regression analysis to time series data, starting with static models and then continuing to dynamic models with lagged variables used as descriptive variables.
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