General methodology of modern economic research Step 2:Development of economic theories/models Step 2:Development of economic theories/models economic Empirical Data theories validation Applications collections /models inference With the empirical stylized facts in mind, economists then develop an economic theory or model. ● This usually calls for specifying a mathematical model of economic theory. Probability and Statistics for Economists Introduction to Statistics and Econometrics May13,2019 8Probability and Statistics for Economists Introduction to Statistics and Econometrics May 13, 2019 8 Step 2: Development of economic theories/models ● With the empirical stylized facts in mind, economists then develop an economic theory or model. ● This usually calls for specifying a mathematical model of economic theory. General methodology of modern economic research Step 2: Development of economic theories/models Data collections economic theories /models Empirical validation /inference Applications