Sunspots (economics)

In economics, the term sunspots (or sometimes "a sunspot") refers to an extrinsic random variable, that is, a random variable that does not affect economic fundamentals (such as endowments, preferences, or technology). Sunspots can also refer to the related concept of extrinsic uncertainty, that is, economic uncertainty that does not come from variation in economic fundamentals. David Cass and Karl Shell coined the term sunspots as a suggestive and less technical way of saying "extrinsic random variable".[1]

  1. ^ Cass, David; Shell, Karl (1983). "Do Sunspots Matter?". Journal of Political Economy. 91 (21): 193–228. doi:10.1086/261139. S2CID 1981980.