NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Shocks

John H. Cochrane

NBER Working Paper No. 4698 (Also Reprint No. r2019)
Issued in April 1994
NBER Program(s):   EFG

What are the shocks that drive economic fluctuations? I examine technology and money shocks in some detail, and briefly review the evidence on oil price and credit shocks. I conclude that none of these popular candidates accounts for the bulk of economic fluctuations. I then examine whether 'consumption shocks,' news that agents see but we do not, can account for fluctuations. I find that it may be possible to construct models with this feature, though it is more difficult than is commonly realized. If this view is correct, we will forever remain ignorant of the fundamental causes of economic fluctuations.

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Document Object Identifier (DOI): 10.3386/w4698

Published: Carnegie-Rochester Conference Series on Public Policy, vol. 41, (1994),pp. 295-364, (December 1994).

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