Cause and Effect and the Economy Essay

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The present state of the economy is dismal and many people point fingers at certain events that they believe have caused the recession. Some even point to particular events and try to explain what made the market tank, or what made the market rally on a particular day. Each night, experts make the talk show circuits to try to explain the events of the day. Sometimes, they seem to hit it on the mark and agree, but most often there is disagreement. This leads one to speculate on the cause and effect of the economy. When it comes to the idea of cause and effect, most think that something causes something else. One can say that an individual drops a ball and then the ball rolls. The dropping caused the ball to roll. But possibly, if the ball were dropped differently, the ball might go in a different direction. Similarly, someone might say that the cause of a fire is a match, but some point to the person who lit the match. There is also something in philosophy referred to as simultaneous cause and effect. Many areas of economics see things as occurring at the same time. The cause and effect relationship is something that is often discussed in philosophy. Hume in fact claimed that his interest in causal microeconomics is tied to that of a detached philosopher and would be policy advisor (Hoover, 2001). It is quite difficult to pinpoint cause and effect in regard to those things. Many economists do not see economics as being associated with a cause and effect relationship. However, one economist by the name of Granger does to an extent provide a sense of how cause and effect exists in economics. Other theorists also such as LeRoy and Sprites provide theory in terms of causality in economics (Hoover, 2001). Noted theorist Adam Smith also studied cause and effect (Smith & Fry, 1992). Some refer to cause and effect economics as essentialism (Ruccio, 2008). Under
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