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Unit-1 Broad Classification of Economic Relations:: Standard International Trade Classification

The document discusses the differences between econometrics and mathematical economics. Econometrics uses statistical tools like regression analysis to establish causal relationships between economic variables based on data. It is used to empirically test theories. Mathematical economics is broader and uses tools from calculus, linear algebra, and other fields to build theoretical economic models and analyze their properties. While econometrics focuses on applications to real data, mathematical economics develops theoretical frameworks. Together they form quantitative approaches to understanding economic relationships and theory.

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91 views2 pages

Unit-1 Broad Classification of Economic Relations:: Standard International Trade Classification

The document discusses the differences between econometrics and mathematical economics. Econometrics uses statistical tools like regression analysis to establish causal relationships between economic variables based on data. It is used to empirically test theories. Mathematical economics is broader and uses tools from calculus, linear algebra, and other fields to build theoretical economic models and analyze their properties. While econometrics focuses on applications to real data, mathematical economics develops theoretical frameworks. Together they form quantitative approaches to understanding economic relationships and theory.

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Unit-1

Broad classification of Economic Relations:


The Broad Economic Categories (BEC) is a three-digit classification, which groups
transportable goods according to their main end use. It is most often used for the general
economic analysis of international merchandise trade data. The BEC system is defined in terms
of the Standard International Trade Classification system.
The original BEC was published in 1971, and revised in 1976, 1986 and most recently in 1988.
The top level categories of the BEC are as follows:

 BEC-1: Food and beverages


 BEC-2: Industrial supplies not elsewhere specified
 BEC-3: Fuels and lubricants
 BEC-4: Capital goods (except transport equipment), and parts and accessories
thereof
 BEC-5: Transport equipment and parts and accessories thereof
 BEC-6: Consumer goods not elsewhere specified
 BEC-7: Goods not elsewhere specified
In 2007 a fourth revision is under discussion, including a possible extension of the BEC to
include tradable services.
Difference between Econometrics versus Mathematical Economics:

Econometrics will typically deal with regression models and will use programs like R or
Stata. It is highly focused on causal inference, and uses different techniques like
regression, matching, and instrumental variables to try to find a true causal relationship
between variables. Econometrics is data heavy, and requires tools like R to pull out the
causal relationships from the data. Econometrics is statistics applied to economics.
Mathematical economics would include econometrics as well as mathematical economic
theory. These days, most economics is mathematical economics.

Mathematical Economics uses differential equations and linear algebra and is very broad.
The topic deals with things like phase diagrams, types of equilibriums, and typically
answers two main questions with regard to economic theory: Does your variable of
interest converge to the equilibrium over time. If yes, what is the path it takes to
converge there (oscillations or monotonically). The reason is that economic theory is
almost all based on mathematical models. These are usually optimization (choice) or
fixed point problems (equilibrium), but there is a lot of stochastic processes too.
Econometrics is the use of statistics to analyze economic data. There is econometric
theory, about how to solve the problems of testing and estimating, but most
econometrics is concerned with actual data.

Econometrics means you will learn to apply mathematics, statistical methods,


and computer science. It teaches you how to analyse information.

A practical example where you can use Econometrics is to predict the money
that will be generated by a marketing campaign. If you spend a dollar extra on a
campaign how much sales will it generate? Econometrics tools can calculate
that. 

Economics:
1. Public Finance
2. International Trade
But, Mathematica Economics is not a branch of Economics. It’s an applicative method
used across various branches of economics. It’s an approach to understand or to
comprehend the concept using mathematical symbols. Whenever we talk about any
problem we derive a set of conclusions from certain assumptions and those are mainly
via the process of reasoning. Through reasoning we come up to certain conclusions.
Assumptions – these assumptions lead to conclusions and occurs through the process of
reasoning.

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