Econometric Theory/Terminology and Notation

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[edit] Terminology and Notation

Above we discussed dependent variables and explanatory variables. There are many synonyms of various terms and these are no exception. The dependent variable can also be called:

  • Explained variable
  • Predictand
  • Regressand
  • Response
  • Endogenous
  • Outcome
  • Controlled variable

and the explanatory variable:

  • Independent variable
  • Predictor
  • Regressor
  • Stimulus
  • Exogenous
  • Covariate
  • Control variable

If we have one explanatory variable. We get what is called two-variable (simple) regression analysis. If we include more than one explanatory variable, it is called multiple regression analysis.

The error term is assumed to be a random or stochastic variable. It implies that it can take any value within a given probability distribution and there are no other factors determining it. If other influences were known, it would no longer be random.

[edit] Bibliography

  • Gujarati, D.N. (2003). Basic Econometrics, International Edition - 4th ed. McGraw-Hill Higher Education, 24-25. ISBN 0-07-112342-3.
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