SVAR analyses are, implicitly or explicitly, based on the assumption that structural shocks belong to the space spanned by the realized values of few observables and therefore, can be identified by analysing the historical data of these variables. If this assumption is violated, SVAR analyses will not be informative enough about the structural shocks, to make them appropriate criteria for evaluating theoretical and structural models; this problem is known as non-fundamentalness. In this study, we review the essence of this problem, its cause, and the approaches proposed to deal with it.

Keywords: non-fundamentalness, information insufficiency, news shocks, noise shocks, SVAR