Economics 2150A/B Study Guide - Quiz Guide: Mathematical Proof, Exponential Function, Rational Function

• School: Western University
• Department: Economics
• Course: Economics 2150A/B
• Professor: Colin Denniston

Document Summary

How to create a model with causal relationships: Choose an independent/outcome variable you want to explain. Specify the variables that are direct causes/effects of the chosen variable. Try to turn the direct causes into indirect causes. You can also identify indirect causal relationships by treating your cause as an outcome variable; in this way, you can find out if something actually causes this. This strategy is called a cause of a cause heuristic. Next, you should identify if there are any moderated causal relationships in your model: the strength/nature of the effect of x on y varies as function of z. For this, examine every direct relationship that is in your theory and ask yourself if there are any circumstances where the impact of x on y will be stronger than in other circumstances. In other words, use the why heuristic to find an extra variable.