1.3 THE METHODOLOGY OF ECONOMETRICS e Procedures of econometrics analysis 4. Specifying the Statistical or Econometric Model Mathematical model assumes an exact or deterministic relationship between the two variables, that is, for a given X, there is a unique value of y. but data or variables are nonexperimentally collected, there may be other forces affectin Y y=B,+B,X1+t(1.2) u represents the random error term, that is, all those forces (besides X) that affect r but are not explicitly introduced in the model, as well as purely random forces.1.3 THE METHODOLOGY OF ECONOMETRICS Procedures of econometrics analysis 4.Specifying the Statistical or Econometric Model Mathematical model assumes an exact, or deterministic, relationship between the two variables, that is, for a given X, there is a unique value of Y. But data or variables are nonexperimentally collected, there may be other forces affecting Y. represents the random error term, that is, all those forces (besides X) that affect Y but are not explicitly introduced in the model, as well as purely random forces. Yi = B1 + B2 Xi + u（1.2） u