This article is extracted from my earlier paper, “The Logic of Causal Inference: With anApplication to Money and Prices” (Working Papers in the Research Program in AppliedMacroeconomics and Macro Policy, No. 55, Institute of Governmental Affairs, Universityof California, Davis). I am grateful to Peter Oppenheimer, Peter Sinclair, Charles Goodhart, Steven Sheffrin, Thomas Mayer, Edward Learner, Thomas Cooley, Stephen LeRoy, LeonWegge, David Hendry, Nancy Wulwick, Diran Bodenhorn, Clive Granger, Paul Holland, Daniel Hausman (co-editor), and three anonymous referees, as well as the participants inseminars at the University of California, Berkeley (Fall 1986), the University of California, Davis (Fall 1988), and the University of California, Irvine (Spring 1989), for comments onthis article in its various previous incarnations. © 1990, Cambridge University Press. All rights reserved.