Publication

This paper evaluates the exogeneity of technology and preference shocks for the German business cycle between 1960 and 2001. The authors test the variables within an error correction framework with respect to government consumption, taxes, M1 and M3, short- and long-term interest rates, exports and the terms of trade. They find evidence that all their shock measures are Granger caused by M3. Their results indicate that the German measures of technology and preference shocks may be regarded as driving forces of the business cycle in small scale models of economic fluctuations.