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Shocks

  • John H. Cochrane

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4698.

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Date of creation: Apr 1994
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Publication status: published as Carnegie-Rochester Conference Series on Public Policy, vol. 41, (1994),pp. 295-364, (December 1994).
Handle: RePEc:nbr:nberwo:4698
Note: EFG
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