Study of Quantitative Economics
Quantitative Economics relates itself with hypotheses, tentative explanations of solutions to abstract representation of real world situations and problems. It represents a systematic attempt to set theoretical hypotheses about economic reality against empirical evidence produced by observing that reality. As we will see, the crucial problem in this process is rendering theoretical concepts and factual measurements sufficiently conformable to justify their being juxtaposed.
In quantitative economics, the emphasis is always on hypothesis formation (specification) and testing. A broad, general statement such as “Income influences consumption” must be sharpened until it says something quite specific, something which might be refuted or confirmed by experience, about the nature of this influence and about the real-world counterparts of the concepts income and consumption.
This specifically is required to turn what is otherwise a vague hypothesis into an empirical statement a proposition capable of being tested (by means of suitable experiments or careful observation) against experiential evidence. An empirical statement is one capable of entering into a confirming or disconfirming relationship with statements of observed facts. The statement “There are purple dogs” would be confirmed by the discovery of a single purple canine. The statement that “All crows are black” would be disconfirmed or refuted by a, single case of non-black crow.
Statisticians concern themselves primarily with refutable hypothesis, ones which could in principle be proved false by the occurrence of at least one specific state of the world. The justification for this is that only when a hypothesis has been exposed to the hazard of refutation is it possible to decide between it and a rival theory.
By means of quantitative economics a quantitative analysis of various types of economic problems are offered. In quantitative economics we bring under discussion certain basic mathematical concepts and econometrics. Apart from this, measurement of “National income” and “National Accounting” is also studied under the realm of quantitative economics. The problems of quantitative economics are studied under the following three heads
- National income and national accounting
- Mathematical concepts
- Econometrics