TYPES OF ECONOMETRICS ( Damodar N. Gujarati )

As The Classificatory scheme in Figure i>5 suggests, econometric may be divided into two broad categories :  theoretical econometrics and applied econometrics. In each ,one can approach the subject in the classical or Bayesian tradition. In this book  the emphasis is on the classical approach . for the Bayesian approach , the reader may consult the references given at the end of the chapter

Theoretical econometrics is concerned with the development of appropriate methods for measuring economic relationship specified by econometric model. In this aspect, econometrics leans heavily on mathematical statistics. For example, one of the methods used  extensively in this book is least squares.Theoretical econometrics must spell out the assumption of this method, its properties, and what happens to these properties  when one or  more of the assumptions of the method are not fulfilled

In applied econometrics we us tools of theoretical econometrics to study some special  field (s) of economics and business, such as the production function, investment function, demand and supply functions, portfolio theory.,ctc.

This book is concerned largely with the development of econometric methods , their assumptions, their uses, their limitations. These methods are illustrated with examples  from various areas of economics and business. But this not a book applied econometrics in the sense that delves deeply into any particular field of economic application . That job is best left to books written specifically for this purpose. References to some of these books are provided at the end of this book.