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Bayesian econometrics
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<p>Bayesian econometrics is a branch of <a href="/facts/Econometrics/7U52gzHt">econometrics</a> which applies <a href="/facts/Bayesianism/Cvn7WWfG">Bayesian</a> principles to economic modelling. Bayesianism is based on a degree-of-belief <a href="/facts/Probability_interpretations/qmuEgkIU">interpretation of probability</a>, as opposed to a relative-frequency interpretation. </p><p>The Bayesian principle relies on <a href="/facts/Bayes%27_theorem/wQqFB2Dt">Bayes' theorem</a> which states that the <a href="/facts/Bayesian_probability/Cvn7WWfG">probability</a> of B conditional on A is the ratio of joint probability of A and B divided by probability of B. Bayesian econometricians assume that coefficients in the model have <a href="/facts/Prior_distribution/JQKAD4o0">prior distributions</a>. </p><p>This approach was first propagated by <a href="/facts/Arnold_Zellner/3w0TtYrC">Arnold Zellner</a>. </p>