News shocks are shocks that are useful for predicting future fundamentals but do not affect current fundamentals. While the idea of “news shocks” as a driver of economic fluctuations has been present since the early work on business cycles it had been formalized and assessed in the last decade. This entry discusses both the theoretical impact of news shocks on the economy and their empirical relevance for business cycles.
KeywordsBusiness cycles Shocks Information
JEL ClassificationE13 E20 E32
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