Econometric modelling
The pronounced economies of scale shown by telephone networks and the reasonably predictable peaks of traffic produced by their users lend themselves to the mathematical modelling of costs and business levels. Forecasting has become a major occupation of economists working in the marketing, corporate planning and finance departments of the larger companies in many industries. It plays a large part in the work of economists in operating companies because of the need to build now for future service requirements. The emphasis on forecasting draws economists into areas of sophisticated statistical analysis and modelling. It also calls for judgmental skills since forecasting, like economics itself, is far from an exact science. Most good econometric forecasts owe at least as much to the assumptions under which the models are run as they do to the structure of the models themselves. The assumptions are termed exogenous variables because they are not determined by the model.
Econometric modelling, Page 1 of 2
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