Living Reference Work Entry

The New Palgrave Dictionary of Economics

pp 1-7

Date: Latest Version

News Shocks

Abstract

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 article discusses both the theoretical impact of news shocks on the economy and their empirical relevance for business cycles.

Keywords

Business Cycles Shocks Information

JEL Classifications

E13 E20 E32