Economic and Planning Research

Classic SVAR analyses, either explicitly or implicitly, are based on the assumption that structural shocks belong to the vector space formed by a limited number of observable variables and can be identified through the historical data analysis of these variables. If this assumption is violated, the information obtained from such analyses will not be sufficient to serve as a basis for evaluating the validity of theoretical models or structural analyses. This issue is known as the non-fundamental shocks problem. In the present study, by reviewing the relevant literature, we will address the core of the non-fundamental shocks problem, the reasons behind its occurrence, and the methods to resolve it.