Many economists attribute **the origin of the term econometrics** to **Ragnar Frisch**, who was one of the winners of the Nobel Prize in Economics in 1969 together with economist Jan Tinbergen, as well as one of the founders of **The Econometric Society **in 1933.

## What is econometrics?

Before defining what it is, it is important to clarify what it is NOT. **Econometrics** should not be confused with **economic statistics**, nor is it the same as **general economic theory**, although it has the same quantitative character.

The **Econometric Society**, founded by Frisch, defined the term as the confluence of **statistics**, **economic theory**, and mathematics. Each of these separately is insufficient to have a real understanding of **quantitative relationships in modern economic life**.

Today we can define it as a **branch of economics** that employs the combined** study of economic data**, mathematical models, economic modelling, statistics, and mathematics to elaborate quantitative economic models and their subsequent application. We can separate it into two parts 1- **econometric theory** and 2- **applied econometrics**:

**Econometric theory**: It is considered a field of statistics that develops tools and methods and studies the properties of these econometric methods.**Applied econometrics**: This is used in**applied economics**and deals with the**development of quantitative economic models**and the subsequent**application of econometric methods**to these models using economic data.

**Econometrics **attempts to** estimate economic magnitudes **located in a specific time and space. Moreover, **econometric methods** are often used to make predictions to **reduce uncertainty** and can therefore also be used to simulate, for example, the effects of alternative policies.

While it is true that econometrics implements methods that significantly reduce **uncertainty**, **drastic changes in the economy** are still a factor that prevents the reliability of **econometric predictions** from being 100%, as is the case with alternative methods.