Hi all,

I have a question on the application of the anticipated news shock. (e.g., https://github.com/JohannesPfeifer/DSGE_mod/blob/master/RBC_news_shock_model/RBC_news_shock_model.mod)

The shocks are applied as follows:

```
//8. exogenous TFP process
z=rhoz*z(-1)+eps_z_surprise + eps_z_news(-8);
shocks;
var eps_z_news=1; //8 period anticipated TFP news shock
var eps_z_surprise=1; //TFP surprise shock
end;
```

However, I don’t understand how these shocks offset each other given they both have positive signs (z=rhoz*z(-1)+eps_z_surprise + eps_z_news(-8))

Shouldn’t it be:

```
//8. exogenous TFP process
z = rhoz*z(-1) - eps_z_surprise + eps_z_news(-8);
shocks;
var eps_z_news=1; //8 period anticipated TFP news shock
var eps_z_surprise=1; //TFP surprise shock
end;
```

or

```
//8. exogenous TFP process
z= rhoz*z(-1) + eps_z_surprise + eps_z_news(-8);
shocks;
var eps_z_news = 1;
var eps_z_surprise = -1 ;
end;
```

And if these alternatives don’t work, what part of the original code implies the shocks are actually offsetting each other rather than going in the same direction?

For example, I was thinking of changing the shocks block so that it accounts for exactly offsetting (corr = -1) shocks:

```
shocks;
var eps_z_news = 1;
var eps_z_surprise = 1 ;
corr eps_z_news, eps_z_surprise = -1;
end;
```

Thanks,

Camilo