College business majors will have the option of taking at least one econometrics course. Econometrics gives mathematical and empirical values to economic ideas and theories. It gives quantitative data to common economic procedures. As there are many contradictory economic theories, many economists perform highly regulated experiments and data collection in order to build evidence for their theory. It is this common practice that makes this a necessary course for anyone looking to enter this field.
Introduction to econometrics will rely heavily on applying statistical formulas and procedures. This is why a prerequisite for econometrics will often times be a statistica. Introduction to econometrics will heavily focus on applying statistical methods to refute or support the most basic relationship in economics, the relationship between supply and demand. This introductory course will evaluate the common methods of explaining supply and demand (Classical, Austrian, Contemporary, etc.) by using regression analysis to determine their validity. This course will also focus on how businesses estimate consumer demand and how they determine what they should supply. These formulas and analysis’s will then be tested by “statistical significance†methods to determine their accuracy. In order to perform all of these mathematical operations, economists often use technologically advanced software. Therefore, many colleges employ the use of software in their courses. Some econometric classes will begin with teaching this software to students in order to continue with the course. The testing of knowledge in this course relies more on a student’s ability to take accurate econometric notes and memorization than the application of practices.
Students focusing on economics or econometrics in general will be required to take econometric courses beyond the entry level course. One of these courses will include nonlinear econometrics analysis. This course focuses on microeconomic models and theories and focuses on more advanced statistical methods such as structural estimation and quintile regressions. Colleges will also often employ an econometric course that discusses the latest in econometric practices and theories in order to keep students educated on the ever changing econometric environment. Lastly, students are offered a project course. This course is usually a final course to all other econometric courses and will allow students to design a project in order to test an economic theory of their own choosing. This involves an innumerous amount of economic data collection and testing and finally a theorizing and presentation of interpreted results.
Since the study of econometrics is not highly sought after, the use of econometric textbooks are limited, but the ones available are excellent. The #1 book for econometric classes is Introduction to Econometrics by James A. Stock, James H. Stock, and Mark W. Watson. These authors have extensive experience with econometrics and relating their use in simple means. This makes their introductory course as well as their advanced textbooks perfect for any college.