the economics history of Canada

3-2-1 Report Sample Answer

Any reasonable answer should get the marks. A reasonable answer is one that satisfies the following:

• Shows the student completed the entire reading

• Shows the student made an effort to understand the reading

• Shows the student made an effort to clarify any concepts they did not understand

• Citations are in APA format (UVic APA style guide available at https://www.uvic.ca/library/research/citation/documents/APA.pdf )

• Shows the student thought about the meaning of the reading (e.g. for the ‘1’ part of the 3-2-1 report)

This sample answer is written for Solow, R. (1985). Economic History and Economics, The American Economic Review, 75(2), 328-331. Retrieved from http://www.jstor.org/stable/1805620 3 Main Points:

• Mainstream economics tries to solve ‘big’ questions, treating economics like physics and trying to find the one true model that applies in all places at all times.

• Different social and institutional setups should require different economic models. Economic historians are well-placed to analyze different social arrangements, etc. in a way that allows this.

• Since economics doesn’t have the advantage of controlled conditions or repeatable experiments, economists should be satisfied with models of limited results and applicability. The economic historian can then check whether the models apply in other times and places and investigate why or why not.

2 things you don’t understand, and what you’ve done to correct it:

• What is the German Historical School, and what is ‘the famous Methodenstreit’?

o Solution: Google search for ‘German Historical School Methodenstreit’. One of the top hits offered a clear explanation:

Watkins, T. (n.d.). The German Historical School of Economic Thought [Web Page]. Retrieved from http://www.sjsu.edu/faculty/watkins/gerhist.htm

o Result: The German Historical School sought an evolutionary model of

entire economies, that highlighted society and politics. The ‘Methodenstreit’ refers to an argument between the German School and thinkers who wanted economics to take a marginal approach to theory. (Since we learn the marginal approach in introductory micro, it’s clear the marginalists won.)

• What is a ‘stationary stochastic process’?

o Solution: Google search for ‘stationary stochastic process’. The top hit pointed to the Wikipedia article on stationary processes

Stationary Process [Web Page]. (n.d.). Retrieved from https://en.wikipedia.org/wiki/Stationary_process

A link within that article cleared up what a stochastic process was:

Stochastic Process [Web Page]. (n.d.). Retrieved from https://en.wikipedia.org/wiki/Stochastic_process

o Result: A stochastic process is something that has some random

variation over time, like (for example) temperature or stock prices. A stationary stochastic process is one where the joint probability distribution that the random process is drawn from does not change over time. For example, the results of rolling a six-sided die repeatedly in the same way.

1 What is the main economic story? Economics studies the allocation of scarce resources. Economist time is a scarce resource. The article argues that overly general modeling is an inefficient use of economist hours, and local models specific to cultures/places times are more efficient. Moreover, the sub-discipline of economic history has a comparative advantage in producing such models.