• Pose and motivate the question to be investigated with your data and econometric model.
o Good econometric questions are generally based on economic theory, however econometrics can be used to analyze all kinds of cause and effect relationships even if they don’t directly relate to previous theory courses. You can study just about anything that interests you. Since the goal of the project is causal identification of the effect of one variable on another, a good question should specify the one primary X variable and one primary Y variable that you are interested in.
2. Formulation of the Model
• Express the question both verbally and in the form of an equation to be estimated