Causality and consistency in economic models
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In this paper, a method for causal and consistency analysis of economic models is presented. The method is based on a qualitative algebra together with a disturbance propagation algorithm. Given a set of equations, the corresponding structural model is derived by causal ordering. Based on it, different reasoning strategies over the model are given a graph-oriented interpretation in terms of a graph-search algorithm. One of them, i.e. the one corresponding to long-term economic analysis, is then further developed as a propagation algorithm. It is finally shown how the defined algebra and propagation algorithm may enable several kinds of consistency checks over the model and the policy targets.
Key wordsCausal reasoning qualitative reasoning propagation algorithm
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