  The optical spectrum of liquid water is analyzed by subsystem time-dependent
density functional theory. We provide simple explanations for several important
(and so far elusive) features. Due to the disordered environment surrounding
each water molecule, the joint density of states of the liquid is much broader
than that of the vapor. This results in a red shifted Urbach tail. Confinement
effects provided by the first solvation shell are responsible for the blue
shift of the first absorption peak compared to the vapor. In addition, we also
characterize many-body excitonic effects. These dramatically affect the
spectral weights at low frequencies, contributing to the refractive index by a
small but significant amount.
