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Subject:
From:
[log in to unmask] (Kevin Hoover)
Date:
Mon May 21 12:01:57 2007
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Pat Gunning wrote:
"The textbook and professional terminology nowadays defines shock as a 
shift of aggregate demand or supply that is not caused by government."


The qualification "not caused by the government" is not right.  
"Monetary policy shock" and "fiscal policy shock" are perfectly 
idiomatic in modern macroeconomics.  For example, if a central bank can 
be characterized as following a reaction function, a random departure 
from that function is known in the vector autoregression (VAR) 
literature and the optimal monetary policy literature as a monetary 
policy shock.

Kevin Hoover


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