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Estimation, inference and testing

While the study of identification is about what can be learned from economic models when applied to data, the study of estimation, inference and testing is concerned with, inter alia: the measurement of identified quantities using real data; summarising the precision of estimates; quantifying how well the data support particular hypotheses of interest; and quantifying the degree of support that the data give to the restrictions imposed by the model being employed. The methods of estimation, inference and testing enable application of models to real-world datasets in an attempt to assess key features of interest in the population from which their data are taken. These are the methods that produce the magnitudes used in policy evaluation, and measures of their accuracy, and that allow an assessment of their robustness to changes in a model's assumptions.