Differenciate theoretical and applied econometrics
Theoretical econometrics focuses on the development of statistical and econometric methods and models. It is concerned with establishing the theoretical foundations of econometric techniques and investigating their properties. Theoretical econometricians often develop mathematical proofs and conduct simulations to understand the behavior and properties of econometric models. They aim to postulate and prove theorems about the statistical properties of estimators and test statistics.
On the other hand, applied econometrics applies the developed techniques and models to real-world economic data. Applied econometricians gather, organize and analyze data to estimate parameters of economic models, test economic hypotheses, and make economic forecasts. They use econometric software packages and statistical techniques to analyze empirical data and draw conclusions about economic relationships and causal effects.
In summary, theoretical econometrics is concerned with the development of statistical and econometric theory, whereas applied econometrics applies these theories to real-world data for practical purposes.