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Immer seltener lebe ich in meinem Bett. [W As many similar forms of econometrics exist, the econometrician will have to define clearly the econometric models to be used and which assumptions it is believed to be consistent with. The models may differ in assumptions concerning the underlying theory, the types of data, and whether data are (partial) realizations or samples. Under specific assumptions, the aim of econometrics might be either to test economic theory for its validity against observed data, or to construct statistical estimators based on the theory and data. Typically, the econometrician is interested in using an economic theory as a framework to explain the data. Problems in economic methodology (sometimes called microeconometrics) can arise when using tools and methods from mathematics. For example, economic models often include variables that are unobservable or difficult to observe, and their properties are frequently determined from unobservable or latent (or fuzzy) variables. The econometrician would want to include such unobservable variables in the econometric estimation when there are good reasons to do so. Similarly, the econometrician must often consider the marginal contributions of individual data elements. The econometrics of macroeconomics relates to the econometrics of microeconomics. Macroeconomics, the science of economic activity at the national or global level, concerns how societies manage scarce resources, including how to maximize overall utility, and the knowledge of how economics affects the real world. Conversely, microeconomics is the study of how households and firms make decisions about their money and how economic decisions influence households’ and firms’ money. Using microeconomics, the econometrics of macroeconomics explores how economic decisions affect macroeconomic variables. Microeconomic econometrics can be used to study consumer behavior, the determinants of household consumption and production, capital market decisions, competition policy and public works. Econometrics in economics Econometrics in economics attempts to answer a specific scientific question by using a quantitative approach. The discipline is concerned with the measurability of certain phenomena. Traditionally, economists have used mathematical models to explain economic phenomena and make economic predictions. In this approach, the scientists seek generalizing or abstract models that can be used to answer questions in economic theory and policymaking. Important tools of econometrics in economics are linear regression, non-linear regression, factor models, time

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