Econometrics is a subject I am afraid of !!!!
This is the subject in which I learn and relearn every day.
But what is Econometrics?
I have tried to get a very simple intuitive meaning for a layman like me.
Econometrics is a subject which borrows from economic theories, mathematics, and statistics.
Literally, it stands for “economic + metrics” which means economic measurements.
More simply, measuring and analyzing an economic phenomenon is what we say “ECONOMETRICS”.
For example:
Law of demand says there is an inverse relation between price and demand. It is an economic theory.
Measuring the elasticity of demand using regression is the part of econometrics.
Economic theory+measurement technique=Econometrics
It can be explained simply by the diagram given below:
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