Economic analysis is a valuable skill for anyone seeking to understand how business decisions can impact a company’s financial health. It’s also a critical part of the research and evaluation process for government agencies and nonprofit organizations seeking to make informed decisions on projects, policies, or other initiatives. Economic analysis uses a variety of tools, including statistical and mathematical modeling, to evaluate and understand data.
When writing an economic analysis, it is important to start by identifying your dependent variable and determining what factors may affect it. This will help you narrow down your options for explanatory variables. You can then use statistical methods to test your models and hypotheses. As economic analysis has a strong empirical component, most of the work is done with real world data (census reports, balance sheets, etc) and mathematical approaches like regressions and econometrics, as taught in your economics or econometrics courses.
Another common type of economic analysis is a cost-benefit analysis, which examines the cost and benefits of an initiative or policy. This is commonly used by federal agencies to determine if a project or program will be profitable or not. A cost-benefit analysis can be conducted either before or after a policy change, and it can be performed at the local level, city, state, country, or global scale.