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Essentials of Econometrics.

In the preface of this book, the author states that it is intended to be "user-friendly", by providing a brief, clear, applied, and nonthreatening introduction to econometrics. Indeed, there is long been an urgent need on the part of students at all levels, for a non-technical, legible, and understandable introduction to the essential tools of econometrics and the meaning of mathematical symbolism. Until recently, textbooks were available only on econometric technique or methods, covering both with various degrees of sophistication, but with only limited applications. To make matters worse, in some textbooks, methods have been kept separate from applications, creating a wedge between the two, giving rise to unnecessary confusion and hardships for students. In short, the proper balance between method and application has been lacking for the most part.

Fortunately, Gujarati's book remedies the above conditions. Each chapter carefully begins with a statement of theory, principles, or background information with abundant illustrations and applications, followed by numerous theoretical and practical problems, with clear step-by-step solutions. Professor Gujarati proceeds effortlessly from a review of probability and statistics together with the detailed classical linear regression model, to the thorny problems of multicollinearity, heteroscedasticity, and autocorrelation. These problems which represent the "bread and butter" of econometrics and are frequently encountered in and out of the classroom, are treated in a logical, straightforward, and systematic manner, namely: the nature of the problem; what are its consequences; methods of detection; and methods of correction or remediation. All of this accomplished with a poise, ease, and continuity that is almost illusory without the many abrupt and artificial demarcations usually found in standard texts. An additional and welcome touch is provided in Appendix A by the listing of some popular statistical packages to guide the student in the use of the computer and in the interpretation of econometric results.

In terms of prerequisites, only some linear algebra and statistical concepts are necessary for understanding the methodology of this book. A comprehensive review of these is included in Part I of the text. Although the last chapter treats material that is complex by any standard, Gujarati's work is unique in making the arcane language of even this more advanced subject matter as understandable as can reasonably be expected.

In summary, ESSENTIALS OF ECONOMETRICS is highly recommended as a solid, interesting, and practical exposition of the basic concepts usually treated in the introductory course. Its readability is exceptionally high; key concepts come alive in a lucid, relevant, and friendly way, which is certain to please both teachers and students. A selected bibliography at the end nicely rounds out this very complete and exceptionally lucid book in the nebulous world of econometrics.
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Author:Lombardi, Waldo John
Publication:American Economist
Article Type:Book Review
Date:Sep 22, 1992
Words:443
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