What’s in econometrics training?

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Econometrics is a specialized subset of statistics, focused on the quantitative analysis of business and economic data. It is used by economists, investment analysts and accountants. Econometrics training typically covers the application and theories involved in predicting economic factors such as employment rates and financial market activity.

Although most econometric studies are done using computer models, it is important to have a clear foundation in econometric theory in order to correctly build 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 today’s practitioners. Generally, topics covered include theoretical and applied econometrics, consisting of at least an overview of linear algebra, time series econometrics, data analysis techniques, model building, and hands-on practice using currently available econometric software packages.

All academic econometrics courses must present a foundation in econometric theory, including the very intensive use of linear algebra. Other areas commonly included in university courses are basic econometrics techniques, as well as how and when they are best used. Some professional courses also cover this area under review, as most professional economists have some exposure to the topic.

Time series analysis is an essential 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 underlying time series and how to analyze them to obtain the desired results. Time series econometrics involves analyzing the movement of one or more dependent variables and generally works to predict future movements as a result of changes in the independent variables.

Practical or applied econometrics classes generally cover how to design models, collect data, and interpret analysis results. Even with a well-constructed model, the results are only as good as the data used; therefore, understanding how to get the best data for a specific project is vital, whether collecting or purchasing data from a reputable source. Properly evaluating results requires an understanding of the limits of computer modeling and the ability to interpret complex results in ways that are useful for formulating government or business policies to achieve desired outcomes.

For students interested in thorough coverage of theory, a university course is usually recommended, and all economics courses are usually required to take econometrics. Business students may have an advantage if they also have training in econometrics, even if it is not required by the curriculum. If the goal is to become proficient in using a specific econometric software package, it is wise to take advantage of econometrics training offered by the software company, which is often offered in person and online.

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