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Vilnius, Lithuania


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Subject area: economy and administration
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Econometrics is the application of statistical methods to economic data and is described as the branch of economics that aims to give empirical content to economic relations. More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference". An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships". The first known use of the term "econometrics" (in cognate form) was by Polish economist Paweł Ciompa in 1910. Jan Tinbergen is considered by many to be one of the founding fathers of econometrics. Ragnar Frisch is credited with coining the term in the sense in which it is used today.
Intermediate between mathematics, statistics, and economics, we find a new discipline which, for lack of a better name, may be called econometrics. Econometrics has as its aim to subject abstract laws of theoretical political economy or "pure" economics to experimental and numerical verification, and thus to turn pure economics, as far as possible, into a science in the strict sense of the word.
Ragnar Frisch (1926) "On a Problem in Pure Eco­nomics: Translated by JS Chipman." Preferences, Utility, and Demand: A Minnesota Symposium. 1926."
Econometrics may be defined as the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference.
Paul Samuelson, Tjalling Koopmans, and Richard Stone. "Report of the evaluative committee for Econometrica." Econometrica- journal of the Econometric Society. (1954): 141-146.
Though he died in 1946, Keynes still dominated economics at Cambridge in the mid-1960s. It wasn't just that all the leading figures among the faculty, Richard Kahn, Joan Robinson, Brian Reddaway, David Champernowne, Nicholas Kaldor, and James Meade, had been his pupils and/or collaborators. It was the tone of the place. The study of economics, theoretical or empirical, was driven by the desire to improve the conduct of economic policy. This did not mean that pure theory was neglected. Indeed, in those years Robinson was fighting a stirring battle in the realms of high theory with Paul Samuelson and Robert Solow from the Massachusetts Institute of Technology. Nor was Cambridge innocent of the cutting edge of econometric technique. Richard Stone, who, following Keynes's suggestions, had created the first modern national income accounts, was still director of the Department of Applied Economics where much of modern econometrics was pioneered. Nonetheless, we were taught that theory and technique should serve the higher cause of rational economic policies, and to use our newly learned econometric expertise to write essays on unemployment, or inflation, or the balance of trade, or some other topic at the top of the current political agenda.
John Eatwell, "Citizen Keynes", The American Prospect (1994)

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