Stopping by Safeway to refill my mom's medication and pick up mine of which I hadn't taken for a long time but doctor recommended me to keep taking, I noticed they were pretty busy.
Coming back home to take a rest on bed, I came down to have dinner. The red bean congee was overcooked, so the taste was a bit odd. However, because I ate my own made sandwich at work around 2:00 pm, I wasn't very hungry.
Taking another an hour break, I went to gym to work out. At the end, I was totally sweaty and felt so good to drive back home.
I planned to wrap up my diary but sensed exhaustion, so fell into sleep on the bed in study room until a while ago. Now, it is 5:00 AM exactly, I am going to finish my review of Chapter 3 of Economics Rules, then go to work. Yes, I remembered wrong, I only finished reading Chapter 3 rather than Chapter 4 last Friday, and focused on watching soccer and football through the weekend without reading more.
Per author, so many economics models are out there for selections, it is a critical process in diagnosing an appropriate one for a particular issue. He used his own experiences of diagnostics of growth strategies for developing countries to express his theories:
- Neoclassical Model applied to supply of physical and human capital and barriers faced;
- Endogenous Model applied to investment in new technologies;
- Dual Economy Model applied to structural transformations.
After the model is selected, hypothesis is proved through modeling. If the model works appropriately, the targeted strategy is verified. If it doesn't work, the model needs to be modified or even abandoned. This decision tree he and his co-workers developed illustrates Supply & Demand always being the two sides of any factors.
There are four general principles of model selection:
- Verification of Assumptions;
- Verification of Mechanism;
- Verification of Direct Implications;
- Verification of Incidental Implications.
In general, model selection is just like the external validity check for lab and field experiments other sciences perform.
Reading through this chapter, I was triggered to think about current stock markets' turmoils globally. Are governments intentionally dragging down the markets to push investors to become consumers? For example, Chinese need to transform investment and export driven economy to domestic consumption driven economy, people should foster habits to consume instead of speculations in stock markets. There may be models behind this assumption. This is also applied to current US markets as well.
Today's markets seem recovered after Martin Luther King's. Maybe everyone should have a dream and believe the dream to become true.
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