Bayesian Models and Macroeconomic Analysis

The current essay focuses on the importance of studying Bayesian approach so as to analyze the impact of foreign direct investment on macroeconomics of the Yemen Republic. In probability theory and statistics, Bayes' theorem alternatively Bayes' law, is a theorem with two distinct interpretations. In the Bayesian interpretation, it expresses how a subjective degree of belief should rationally change to account for evidence. In the frequency interpretation, it relates inverse representations of the probabilities concerning two events. In the Bayesian interpretation, Bayes' theorem is fundamental to Bayesian statistics, and has applications in fields including science, engineering, economics, particularly microeconomics, game theory, medicine and law. The application of Bayes' theorem to update beliefs is called Bayesian inference.