General methodology of modern economic research Step 3:Empirical validation/inference of economic models Step 3:Empirical validation/inference of economic models One needs to estimate unknown model parameters and make inferences based on observed data. Check whether the econometric model is adequate.An adequate model should be at least consistent with the empirical stylized facts. Probability and Statistics for Economists Introduction to Statistics and Econometrics May13,2019 11Probability and Statistics for Economists Introduction to Statistics and Econometrics May 13, 2019 11 Step 3: Empirical validation/inference of economic models General methodology of modern economic research Step 3: Empirical validation/inference of economic models • One needs to estimate unknown model parameters and make inferences based on observed data. • Check whether the econometric model is adequate. An adequate model should be at least consistent with the empirical stylized facts