Quote of Causality

.. Granger causality has however very little to do with causality in an economic sense. Granger causality is about predictability. A common joke among econometricians is that the number of people carrying an umbrella Granger causes the probability that it will rain. Of course, carrying an umbrella does not cause rain. Instead, people carry an umbrella in anticipation of rain, just like donor countries may increase aid in anticipation of harsh economic conditions in recipient countries ..


pg. 398

Lof, M., Mekasha, T. J., & Tarp, F. (2015). Rejoinder to Herzer, Nowak-Lehmann, Dreher, Klasen, and Martinez-Zarzoso (2014). World Development,70, 397-399.


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