General methodology of modern economic research Step 3:Empirical validation/inference of economic models Step 3:Empirical validation/inference of economic models economic Empirical Data theories validation Applications collections models /inference A key is to transform an economic model into a testable empirical econometric model. One often has to assume some functional form, up to some unknown model parameters,or to choose suitable instrumental variables to form a set of moment conditions. Probability and Statistics for Economists Introduction to Statistics and Econometrics May13,2019 10Probability and Statistics for Economists Introduction to Statistics and Econometrics May 13, 2019 10 Step 3: Empirical validation/inference of economic models General methodology of modern economic research Step 3: Empirical validation/inference of economic models • A key is to transform an economic model into a testable empirical econometric model. • One often has to assume some functional form, up to some unknown model parameters, or to choose suitable instrumental variables to form a set of moment conditions. Data collections economic theories /models Empirical validation /inference Applications