Introduction

Econometrics is the computational utilization and application of statistical and mathematical models using data to establish theories or test current economic hypotheses and predict future patterns from historical data. It submits statistical trials to real-world evidence, then compares and evaluates the findings against the theory or theories being tested.

Econometrics may be subdivided into two main groups, theoretical and applied, depending on whether you are interested in testing an existing theory or in using existing data to establish a new hypothesis based on those findings. Many who participate in this practice regularly are usually called econometricians.

R language

R is just an implementation of the object-oriented programming language S. It is developed by statisticians, and is free, published under the GNU General Public License. Syntactically and functionally the common statistics kit, S+, is quite similar (if not identical).

R is much more versatile than most econometrician programs, since it is a modern language of mathematical programming, not just a program that does regressions and tests. This means we should not limit our analysis to the functions included in the default package. There is a vast and ever-growing online library collection for use in many disciplines. The corresponding libraries are posted on the R web site as researchers create new algorithms and processes. In this context, R is still at the forefront of the awareness of statistics. It is easy to extend due to the facility and versatility of programming in R (Farnsworth, 2008).