Econometrics is a specialized subset of statistics, geared toward quantitative analysis of business and economic-related data. It is used by economists, investment analysts, and accountants. Econometrics training typically covers the application and theories involved in forecasting economic factors, like employment rates and financial market activity.
Even though most econometric studies are done with computer models, it is important to have a clear grounding in econometric theory in order to correctly construct models and interpret the results of any analysis. The actual content of econometrics training will depend on whether it is part of an academic curriculum, or taught by an econometrics software company and geared toward current professionals. Generally, topics covered include both theoretical and applied econometrics consisting of at least an overview of linear algebra, time series econometrics, data analysis techniques, model construction, and hands-on practice using currently available econometrics software packages.
All academic econometrics training courses should feature a grounding in econometric theory, including fairly intensive use of linear algebra. Other areas typically included in college courses are basic econometrics techniques as well as how and when these are best used. Some professional courses also cover this area in review, since most professional economists have some exposure to the topic.
Time-series analysis is a key aspect of econometric analysis. Examples include forecasting a variety of economic indicators and business metrics, such as stock prices, gross domestic product (GDP), unemployment rates, and product sales figures. All econometrics training focuses on the theory and formulas behind time series, and how to analyze them for the desired results. Time series econometrics involves analyzing the movement of one or more dependent variables and often work to predict future movements as a result of changes in the independent variables.
Practical or applied econometrics training classes usually cover how to design models, collect data, and interpret results of analysis. Even with a well-constructed model, the results are only as good as the data used, so it is vital to understand how to obtain the best data for the specific project, whether collecting it or purchasing data from a reputable source. Proper assessment of results requires understanding the limits of computer modeling and the ability to interpret complex results in useful ways to formulate government or business polices to achieve desired outcomes.
For students interested in a thorough coverage of the theory, a university course is generally recommended, and all economics majors are typically required to take econometrics. Business students may have an advantage if they take econometrics training as well, even if not required by the curriculum. If the goal is to become proficient in the use of a particular econometrics software package, it is often wise to take advantage of econometrics training offered by the software company, which is often offered both in-person and online.
