Empirical Foundations of Economic Analysis

Cover Empirical Foundations of Economic Analysis
Empirical Foundations of Economic Analysis
Geoffrey P E Clarkson
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22) to generate the estimation equations. This process, however, involves a large amount of computation. To reduce the computations various special techniques are employed. Because the method of least squares is not a viable alternative, a number of approximations to maximum likelihood have evolved. Among these the techniques of limited information, instrumental variables, and Theil's method of reduced forms are frequently used, —' The object of these methods is to approximate the 8/ — For a de...tailed discussion of these techniques see: S. Valavanis, op. Cit . , Chapters 7, 8, and 9.
- 149 - maximum likelihood estimates without going through the elaborate analysis required by the solution of the equations derived from (7. 22). While such techniques are important to the practicing econometrician they can be disregarded here as this analysis is concerned with the foundations of measurement in econometrics not with various computational procedures.
9/ 3. Testing Statistical Hypotheses— A statistical hypothesis is a statement about the probability density function (frequency function) of a random variable.


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