Econometrics and quantitative methods
What it is:
Econometrics involves estimating mathematical models to represent and describe real-world economic relations.
Types of studies:
The current use of econometric modelling is very broad and its application includes (among other things) analysing market trends (demand forecasting), understanding company cost drivers (benchmarking) and quantifying consumer responses to changes in key variables (income- and price-elasticities).
Our expertise includes:
Statistical Analysis — collecting and analysing quantitative data in order to understand trends and the underlying mechanisms behind various events or relationships (it can include a description of binomial variables, percentages, rankings etc. or explore the relation of the data to the underlying population for predictive purposes).
Regression — identifying and measuring a quantitative relationship between an explained and an explanatory variable. Different forms of regression can be used, including: simple linear regression, multivariate regression, binary regression, Generalised Least Squares regression, instrumental variables regression and two stage least squares regression.
Microeconometric analysis — focusing on tracking individuals or firms through time, being able to take into account the individual effects of the units of interest as well as time effects (fixed and variable effects).
Difference-in-difference — relevant for measuring the impacts of changes in regimes/shocks. It uses observational study data of the same units across time and requires that the units (firms, individuals or countries) are divided into treatment and control groups. Difference-in-difference estimates the effect of an intervention by comparing the average change in the outcome variable experienced by the treated group over time to the average change in the outcome variable experienced by the control group.
Stated preference — survey method which is typically used to identify a person’s willingness to pay. Its key advantage is that it enables a monetary value to be placed on certain impacts of a policy or measure.
Input/output analysis — general-equilibrium approach which links various sectors in the economy through fixed linear relationships between the output of a sector and the inputs it requires from other sectors. It is possible to calculate the effects of an increase in final demand for one sector on every other sector of the economy and on various macroeconomic variables.
Multi-criteria analysis — using scores and weighting to reflect the importance of different measures (policy options) to the decision maker.