ABSTRACT

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book represents an attempt to explain how and why econometric methods are used in a way which does not assume that the reader is already familiar with the mathematical and statistical concepts involved. Econometrics is a discipline embracing aspects of methodology from economics, mathematics and statistics. The models with which the econometrician is typically concerned are expressed in mathematical form, but this is not true of explicit models in general or of economic models in particular. The book also considers various extensions of the model, to allow for more realistic representation of highly interdependent economic systems. The conditions to be imposed on the disturbance term are obtained by applying the concept of modelling to the process by which disturbance values are determined. The model used is similar to that which can be applied to a game of chance.