# tutorial

## Econometrics: What is interval data?

Good morning, So what is interval data? When used in econometrics, interval data is that which is a fixed distance apart on a given scale. For example, the measurement of temperature on a given scale would be an example of this. This is often seen in economics and econometrics when we are comparing different time …

## Econometrics: What is ordinal data?

Hello again, The key in econometrics to what a particular concept means is often found in the title. In this case, for example  ordinal data is data which is in ‘order’. This data would include grades received on a college exam, the varying income brackets that people are in or their respective rank in the …

## Econometrics: What is nominal data?

With nominal data, each category is mutually exclusive to the next and there is no crossover between the respective categories. Examples of such nominal scale variables include such factors as gender, employment status or college graduate. This is not a hugely informative measure as a category is simply selected and detailed information is lacking. A useful …

## Econometrics: What is cross-sectional data?

Hey, So what is cross-sectional data? Cross-sectional data is effectively a snap shot of a given population. For example if you wanted to achieve a measure of income levels in a country at a given point in time, you make decide to take a random sample of 10,000 people and survey these participants. Such a …

## Econometrics: What is time-series data?

Time series data is points of information achieved successively at equally spaced periods of time. An example of time series data used in econometrics would be that of share price movements. These data points increase, decrease or remain the same and can be plotted accordingly. These respective data points are often plotted in a line …

## What are degrees of freedom?

In econometrics, the degrees of freedom are the number of observations in a sample minus the number of restrictions which are placed upon them. If you were take a number of observations in a sample (n) then the amount of degrees of freedom you have in this sample are the amount of observations which are …

## Econometrics: What is Endogeneity?

Endogeneity occurs where an explanatory variable is present within your regression model which is correlated to the error term. This is therefore referred to as an endogenous variable. This violates Classical Assumption number 3 which states that there is no correlation between any of the explanatory variables and the error term. Read our post on …

## Econometrics: What is parsimony?

The principle of parsimony suggests that as general rule, a regression model as simple should be kept as minimalistic as possible. If a substantial amount of the variation in the independent variable Y can be explained by a few variables, then it is not necessary to add variables as a matter of course. The error …

## Econometrics: What is the dummy variable trap?

The common intercept value in a linear regression equation is always taken as one. The basis for this is that including a constant in a given model is the same as including an explanatory variable whose value is always equal to one. When using dummy variables in econometrics, dummy variable will always takes the value …

## What is a correlation coefficient?

The correlation coefficient is used in economics and throughout econometrics to measure the strength of a relationship between two given variables. This econometric measure also gives an indication of whether the two variables are positively related or negatively related to each other. The correlation coefficient is measured between -1 to +1. For example if we …

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