The chapter opens with ecological interdependence and then links weather, fish supply, feed substitution and grain demand. It also discusses market shocks and acknowledges that their implications can become clear only afterward.
Name the missing steps
An economic explanation is stronger when you can describe who changes behavior and why. A chain can fail at any link or unfold more slowly than expected. Our exercise is to turn the analogy into a sequence of claims that can be examined.
Worked example
A hypothetical shortage of one feed ingredient might encourage substitution toward another. The relevant questions include whether substitution is feasible, how large demand becomes and whether prices already reflect it.
Case connection
A policy change provides a concrete mechanism to investigate, unlike a coincidence between two rising lines.
The Swiss franc policy break
Source-grounded facts
The Swiss National Bank ended its CHF 1.20-per-euro floor, replacing a policy that market participants had relied upon.
Context
The Swiss National Bank had maintained a minimum rate of CHF 1.20 per euro. That policy formed part of the environment in which traders and businesses made currency decisions.
Outcome
The bank continued monitoring exchange-rate conditions after ending the floor. Removing one policy commitment did not mean abandoning monetary policy or promising a particular subsequent exchange rate.
- On 15 January 2015, the bank announced that it was discontinuing the minimum exchange rate.
- It also lowered the interest rate on sight deposits to −0.75%.
- In April, its chairman explained that euro weakness had required interventions of rapidly increasing size, making the floor unsustainable.
Case analysis
A named policy change supplies an observable starting point, but the rest of a causal chain still needs evidence. Identify who faces a new constraint, what action becomes attractive and how that action could affect the market being studied. Record the timing of each step. An economically plausible mechanism is a research plan, not automatically a verified prediction.
Try it
Draw a three-step causal chain. For each arrow, write one observation that would support it and one that would challenge it.