Granger causality and equilibrium business cycle theory

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.

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Year of publication:	2006
Authors:	Wen, Yi
Institutions:	Federal Reserve Bank of St. Louis
Subject:	Business cycles

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Extent:	application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Published in Federal Reserve Bank of St. Louis Review, May/June 2007, 89(3), pp. 195-205 Number 2005-038
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005707614