Analytical Explanations of the Concept of the Fixed Term and the Random Error Term in Econometric Models

Abstract

The error term or disturbance term plays an important role in the econometric model, and there are several reasons for including it in the econometric model, including issues related to measurement problems, the omission of variables from the econometric model, or for contingency reasons or related to abnormal human behavior from the general rule, or for inaccurate description of the models or inaccurate preparation of the data. The fixed term or intercept also has different meanings in the econometric model, such as the mathematical meaning, the econometric meaning, the fixed term without meaning, or the fixed term with a negative sign, and others.