Granger causality and equilibrium business cycle theory

Yi Wen

No 2005-038, Working Papers from Federal Reserve Bank of St. Louis

Abstract: Post-war US data show that consumption growth \"Granger causes\" output and investment growth. This is puzzling if technology is the driving force of the business cycle. I ask whether general equilibrium models with information frictions and non-technology shocks can rationalize the observed causal relations. My conclusion is they cannot.

Keywords: Business; cycles (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dge and nep-mac
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Published in Federal Reserve Bank of St. Louis Review, May/June 2007, 89(3), pp. 195-205

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Related works:
Journal Article: Granger causality and equilibrium business cycle theory (2007)
Working Paper: Granger Causality and Equilibrium Business Cycle Theory (2001)
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DOI: 10.20955/wp.2005.038

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