Statistics : Econometric Modelling

 Econometric modelling involves analytical study of complex economic phenomena with the help of sophisticated mathematical and statistical tools. The size of a model typically varies with the number of relationships and variables it is applying to replicate and simulate in a regional, national or international level economic system. On the other hand, the methodologies and techniques address the issues of its basic purpose – understanding the relationship, forecasting the future horizon and/or building "what-if" type scenarios. Econometric modelling techniques are not only confined to macro-economic theory, but also are widely applied to model building in micro-economics, finance and various other basic and social sciences. The successful estimation and validation part of the model-building relies heavily on the proper understanding of the asymptotic theory of statistical inference. A challenging area of econometric modelling has been the application of advanced mathematical concept of wavelets, which are ideally suited to study the chaotic behaviour of financial indicators, to name just one. A successful combination of econometrics with the non-parametric artificial intelligence techniques is another interesting aspect of the modelling exercise. So, whether the purpose is to validate or negate age-old theories in the contemporary world, or to propagate new ideas in the ever-growing complexities of physical phenomena, econometric modelling provides an ideal solution.