NBER Working Paper No. 4698 (Also Reprint No. r2019)
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.
Published: Carnegie-Rochester Conference Series on Public Policy, vol. 41, (1994),pp. 295-364, (December 1994).