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Mathematical Economics Definition
Mathematical economics refers to the application of mathematical principles in developing theories and evaluate problems relating to economics. When economists use mathematical methods when creating theories and analyzing economic problems, mathematical economics is put to use.
Mathematical economics can also be defined as an integration of mathematical methods and economic principles to formulate economic theories and analysis of problems.
A Little More on What is Mathematical Economics
Mathematical economics is one of the advanced methods of the study of economics. This model of economics relies on computing models, modern data techniques and other advanced mathematical applications. Mathematical economics seeks to forecast economic patterns, analyze economic problems and create economic theories using a set of statistical data. Through an empirical observation of the data, mathematical economics is able to test economic behaviors and predict outcomes.
This model also allows economists to use mathematical methods to interpret and explain economic phenomena. In a wider scope, economists use econometrics to predict the outcome of a certain phenomenon. Econometrics entails the use of statistical methods, mathematics, and economic principles.
Economists turn to econometrics in specific cases, especially in policymaking where decisions pertaining to an economy are to be made. This economic model embodies statistical, mathematics and economic principles. Before setting an appropriate monetary policy for an economy, for instance, policymakers need to analyze the impact of the policy and how it would affect economic growth. Using econometrics, policymakers can easily use multiple statistical data at their disposal to make an empirical judgment about the policy.
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