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Lecture 9: Principles of Differential Diagnosis - Coggle Diagram
Lecture 9: Principles of Differential Diagnosis
Steps of the diagnostics
the growth story - is it high and unsiustainable, is it low?
go through the diagnostic tree by looking at the symptoms of binding constraints
Posit a syndrome that can account for the symptoms
Search for further testable implications of the
syndrome
Iterate on steps III and IV until you converge
Be Bayesian
P(event A vs Even B) = P (wearing a wig given you are celeb) x P(of celeb) / P (wearing a wig given you are celeb) x P(celeb) + P(wig regular) x (P(regular)
BUT
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sometimes the constraints are interacting, sometimes symptoms re signaling multiple constraints at the same time etc - so we need to make a simplification
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test the syndrome wheter it seems to be the case
The statistical tests
The (shadow) price of the constraint should
be high
some prices are simple
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but often they are difficult
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BUT IF PRICES ARE NOT MARKET DETERMINED BUT SET ADMINISTRATIVELY (LIKE WATER) THEY DONT TELL US ANYTHING
Movements in the constraint should produce significant movements in the objective function (private investment, GDP growth
Movements in the constraint should be correlated with movements in growth
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also... when you are doing these tests you are looking at the past - if there was a certain critical juncture that changs the economy you should be careful
Camels and Hippos: Agents less intensive in that constraint should be more likely to survive and thrive, and vice versa
thriving sectors should be less intensive in the constraint
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Agents are or are at least trying to identify the binding constraint
in argentina everyone is trying to adopt technology to be able to employ less ppl because of the labor regulations
yazaki in Chapas
the syndrome - the story of the binding constraint - the answer is in the legal system or smth like that
something palticular about the country