On the Interpretation of Causality in Granger’s Sense

The concept of causality formulated in 1969 by C.W.J. Granger is mostly popular in the econometric literature. The central assumption of the concept is the fact that the cause precedes the effect and can help in forecasting the effect. Years of application of Granger causality idea have resulted in many misunderstandings related with the interpretation of the empirical findings. The paper focuses on systematization of the definitions based on Granger concept and their proper interpretation.