10/26/2017
Consider an integrated system that consists of social and economic elements.
Describe the evolutions and the interactions among these selective elements.
1870-1920: A strong economic growth, a rapid population growth, a wave of gobalization
1871-1896: Long Depression
1914-1918: World War I
Leonardo DaVinci: "Everything Connects to Everything Else"
But it is important to know how strong and how weak those connections are.
Qualitative conceptual model: to investigate and to empirically justify the logical linkages for the connections.
Quantitative model: to model a Vector Autoregressive (VAR) system and to extract quantitative casual effects for the connections.
Target:To display one complex growth pattern.
Non-quantifiable elements, e.g. second great awakening (U.S. Protestant religious revival).
Non-existing indicators, e.g. indexes of monetary, production, investment, inequality, employment states, stock prices, commodities, etc.
Data are scarce.
Solution: find proxy variables and collect data from various sources, e.g. U.K. unemployment in 1881-1995
Give a background review for the Socio‐Economic status of that era.
Select the social and economic elements which you think are important and relating to the growth trend of human society.
Find the relevant samples for the elements or their proxy variables.
Qualitative: Causal reasoning (regression analyses and existing theories).
Quantitative: VAR (estimation and inference).