Abstract:
Causality is viewed as a matter of control. Controllability is captured in Simon’s analysis of
causality as an asymmetrical relation of recursion between variables in the unobservable
data-generating process. Tests of the stability of marginal and conditional distributions for these
variables can provide evidence of causal ordering. The causal direction between prices and
money in the United States 1950-1985 is assessed. The balance of evidence supports the view
that money does not cause prices, and that prices do cause money.
