Karnizova, Lilia - Institut für Weltwirtschaft (IfW) - 2010
monetary policy and sunspots. The key distinction between the shocks lies in their relation to the realized policy shock. If … monetary policy is 'passive', both types of shocks affect model dynamics through forecast errors. The effect of the news on … monetary policy is 'active', the sunspots are irrelevant, and the model responses to the news shocks are unique. In both cases …