Out in the broader world, the price that has captured attention is that for crude oil, which has fallen by about two-thirds over the past two years. This was a genuine shock: it was not well predicted. But what sort of a shock is it?
Under exogenous monetary policy the central bank here is assumed not to change its short-term interest rate for six quarter in response to the shock, which is akin to policy being constrained by a lower bound on the short-term interest rate.