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Investigating Causal Relations by Econometric Models and Cross-spectral Methods

Econometrica 1969 37(3), 424
There occurs on some occasions a difficulty in deciding the direction of causality between two related variables and also whether or not feedback is occurring. Testable definitions of causality and feedback are proposed and illustrated by use of simple two-variable models. The important problem of apparent instantaneous causality is discussed and it is suggested that the problem often arises due to slowness in recording information or because a sufficiently wide class of possible causal variables has not been used. It can be shown that the cross spectrum between two variables can be decomposed into two parts, each relating to a single causal arm of a feedback situation. Measures of causal lag and causal strength can then be constructed. A generalisation of this result with the partial cross spectrum is suggested.

Markov Processes and Economic Analysis: The Case of Migration

Econometrica 1969 37(2), 280
This paper compares the simple Markov process commonly used in migration studies with an economic model of migration where interregional wage differences are the equilibrating variables. Using the economic model, it appears unlikely that regional exit and entry rates will remain stable as the population is redistributed. As a result, both theory and empirical interstate migration evidence suggest that Markov migration projections will usually understate the population changes required before stochastic equilibrium is reached. IN RECENT YEARS the social sciences, and particularly economics, have experienced