Econometrics is the application of mathematics, statistical methods to economic data and gives empirical content to describe economic relations. It is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference.
Economics often analyzes systems of equations and inequalities, such as supply and demand hypothesized to be in equilibrium. Consequently, the field of econometrics has developed methods for identification and estimation of simultaneous-equation models.
The efficient market hypothesis says that the price of a financial asset reflects all the information available and responds only to unexpected news. Thus prices can be regarded as optimal estimates of true investment value at all times. It is impossible for investors to predict whether the price will move up or down, so on average an investor is unlikely to beat the market.
This belief underpins arbitrage pricing theory, the capital asset pricing model and concepts such as beta.
Today, the EMH is one of the most controversial and well-studied propositions in economics, although no consensus has been reached on which markets, if any, are efficient. However, even if the ideal does not exist, the efficient market hypothesis is useful in judging the relative efficiency of one market compared with another.
Investment putting money to work in two main forms: direct spending on buildings, machinery and so forth, and indirect spending on financial securities, such as bonds and shares, in hope of making even more money.
Economic theory says that a country's total investment must equal its total savings, but this has never been true in the short run and may never be even in the long run, as countries with low savings can attract investment from overseas and foreign savers lacking opportunities at home can invest abroad (Foreign Direct Investment).
A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.
The term "financial markets" is often used to refer just to the markets that are used to raise finance: for long term finance, we consider the Capital Markets; markets in securities such as bonds and shares. Governments and companies use them to raise longer-term capital from investors, although few of the millions of capital-market transactions every day involve the issuer of the security.
For short term finance, instead, we talking about Money Markets, any market where money and other liquid assets can be ent and borrowed for between a few hours and a few months.
Monetary Policy, Central Banks and EMU
It is what a Central Bank does to control the money supply, and thereby manage demand Monetary policy involves open-market operations, reserve requirements and changing the short-term rate of interest. It is one of the two main tools of macroeconomic policy, the side-kick of fiscal policy, and is easier said than done well.
Economic and Monetary Union (EMU) represents a major step in the integration of EU economies. It involves the coordination of economic and fiscal policies, a common monetary policy, and a common currency, the euro. The benefits cooming from the decision include currency stability and low inflation, underwritten by an independent ECB, comparing prices and wages across the euro zone became easier, increasing competition by making it easier for companies to sell throughout the euro-zone and for consumers to shop around.
Macroeconomics and Macroeconomic Policy
Macroeconomics is "the big picture". It analysing economy-wide phenomena such as growth, inflation and unemployment. Contrast with microeconomics, the study of the behaviour of individual markets, workers, households and firms.
Although economists generally separate themselves into distinct macro and micro camps, macroeconomic phenomena are the product of all the microeconomic activity in an economy. The precise relationship between macro and micro is not particularly well understood, which has often made it difficult for a government to deliver well-run macroeconomic policy.
Who I am
Born in 1987, Italian citizen, London lover and fan of British culture, hold a BA in Economics and Management of Tourism at "Ca Foscari" University in Venice and now I am attending the last year of the MSc in Economics (course fully taught in English) at the University of Udine. My main research interests include macroeconomics and macroeconomic policy, monetary policy, central banks and EMU, UK economy, investments and market efficiency. In this website I would present my academic skills, my research projects and posts with a critique analysis of the actually economic scenario. From 2012 I am an effective member of the Royal Economic Society (@University of St. Andrews - Scotland / UK), one of the oldest and most prestigious economic associations in the world with the aim to promote the study of economic science.Marco Ardengo