Econometric Theory/Types of Econometrics

There are two branches of econometrics: theoretical econometrics and applied econometrics.

The former is concerned with methods, both their properties and developing new ones. It is closely related to mathematical statistics, and it states assumptions of a particular method, its properties. It is particularly important to know when they are not fulfilled.

Applied econometrics does what it says: it applies econometric theory to branches within economics, such as unemployment figures, portfolio theory, demand and supply functions, et.c.