Abstract:
Economics is about the distribution of limited resources among alternative uses. To explain this process,
economists develop simple economic models by abstracting from reality. These models have some
mathematical foundations and encompass only the necessary characteristics of the market. The study
discusses the theory behind the development of such models and the problems encountered in the process. As
no model describes reality perfectly, the question is to tell whether a model is good enough. Moreover, the
study discusses a new method of conducting empirical research by utilizing experimental data, where
economists try to find natural experiments and show causal relationships between variables.
Description:
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3. Wooldridge M. Jeffrey. (2009) Introductory Econometrics. A Modern Approach. Michigan State
University. Fourth Edition.
