<Dd> Δ Unemployment = β 0 + β 1 Growth + ε . (\ displaystyle \ Delta \ (\ text (Unemployment)) = \ beta _ (0) + \ beta _ (1) (\ text (Growth)) + \ varepsilon .) </Dd> <P> The unknown parameters β 0 (\ displaystyle \ beta _ (0)) and β 1 (\ displaystyle \ beta _ (1)) can be estimated . Here β 1 (\ displaystyle \ beta _ (1)) is estimated to be − 1.77 and β 0 (\ displaystyle \ beta _ (0)) is estimated to be 0.83 . This means that if GDP growth increased by one percentage point, the unemployment rate would be predicted to drop by 1.77 points . The model could then be tested for statistical significance as to whether an increase in growth is associated with a decrease in the unemployment, as hypothesized . If the estimate of β 1 (\ displaystyle \ beta _ (1)) were not significantly different from 0, the test would fail to find evidence that changes in the growth rate and unemployment rate were related . The variance in a prediction of the dependent variable (unemployment) as a function of the independent variable (GDP growth) is given in polynomial least squares . </P> <P> Econometric theory uses statistical theory and mathematical statistics to evaluate and develop econometric methods . Econometricians try to find estimators that have desirable statistical properties including unbiasedness, efficiency, and consistency . An estimator is unbiased if its expected value is the true value of the parameter; it is consistent if it converges to the true value as sample size gets larger, and it is efficient if the estimator has lower standard error than other unbiased estimators for a given sample size . Ordinary least squares (OLS) is often used for estimation since it provides the BLUE or "best linear unbiased estimator" (where "best" means most efficient, unbiased estimator) given the Gauss - Markov assumptions . When these assumptions are violated or other statistical properties are desired, other estimation techniques such as maximum likelihood estimation, generalized method of moments, or generalized least squares are used . Estimators that incorporate prior beliefs are advocated by those who favor Bayesian statistics over traditional, classical or "frequentist" approaches . </P> <P> Applied econometrics uses theoretical econometrics and real - world data for assessing economic theories, developing econometric models, analyzing economic history, and forecasting . </P>

What is the meaning of blue in econometrics