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Business Cycles Analysis and Expectational Survey Data

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Author Info
Victor Zarnowitz
Abstract

What is the role of foresight, and the significance of the lack of foresight under uncertainty, in the theory of business cycles ? What relevant evidence on these questions can be extracted from the survey data on agents' expectations and experts' forecasts? To provide some answers, the recent work in this area is reviewed in the perspective of economic and doctrinal history. The address proceeds from (1) a discussion of the expectational aspects of modern business cycles theories and (2) a critique of the currently dominant approaches to (3) a summary of the evidence and (4) some illustrations and implications for further analysis. Of the conclusions drawn,perhaps the most general one is that expectations matter a great deal but are not all-important. They may be rational in the sense of effectively using the limited available knowledge and information, but they are also diversified and not always self-validating or stabilizing.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1378.

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Date of creation: Jun 1984
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Handle: RePEc:nbr:nberwo:1378

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hall, Robert E., 1980. "Labor supply and aggregate fluctuations," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 12, pages 7-33. [Downloadable!] (restricted)
  2. John B. Taylor, 1980. "Aggregate Dynamics and Staggered Contracts," NBER Reprints 0126, National Bureau of Economic Research, Inc.
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  3. Waud, Roger N, 1976. "Asymmetric Policymaker Utility Functions and Optimal Policy Under Uncertainty," Econometrica, Econometric Society, vol. 44(1), pages 53-66, January. [Downloadable!] (restricted)
  4. Friedman, Benjamin M., 1979. "Optimal expectations and the extreme information assumptions of `rational expectations' macromodels," Journal of Monetary Economics, Elsevier, vol. 5(1), pages 23-41, January. [Downloadable!] (restricted)
  5. William Poole, 1976. "Rational Expectations in the Macro Model," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(1976-2), pages 463-514. [Downloadable!]
  6. Gramlich, Edward M, 1983. "Models of Inflation Expectations Formation: A Comparison of Household and Economist Forecasts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(2), pages 155-73, May. [Downloadable!] (restricted)
  7. Pesando, James E, 1975. "A Note on the Rationality of the Livingston Price Expectations," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 849-58, August. [Downloadable!] (restricted)
  8. McNees, Stephen K, 1978. "The "Rationality" of Economic Forecasts," American Economic Review, American Economic Association, vol. 68(2), pages 301-05, May. [Downloadable!] (restricted)
  9. Frederic S. Mishkin, 1981. "Are Market Forecasts Rational?," NBER Working Papers 0507, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Mullineaux, Donald J, 1978. "On Testing for Rationality: Another Look at the Livingston Price Expectations Data," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 329-36, April. [Downloadable!] (restricted)
  11. Arrow, Kenneth J, 1978. "The Future and the Present in Economic Life," Economic Inquiry, Oxford University Press, vol. 16(2), pages 157-69, April.
  12. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1, pages 19-46. [Downloadable!] (restricted)
  13. William Poole, 2001. "Expectations," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 1-10. [Downloadable!]
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    • William Poole, 2000. "Expectations," Speech, Federal Reserve Bank of St. Louis. [Downloadable!]
  14. Frank de Leeuw & Michael J. McKelvey, 1981. "Price Expectations of Business Firms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(1981-1), pages 299-314. [Downloadable!]
  15. S. Fischer, 1975. "Long-Term Contracts, Rational Expectations and the Optimal Money Supply Rule," Working papers 166, Massachusetts Institute of Technology (MIT), Department of Economics.
  16. Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployment: A Reconsideration," NBER Reprints 0019, National Bureau of Economic Research, Inc.
  17. Brunner, Karl & Cukierman, Alex & Meltzer, Allan H., 1980. "Stagflation, persistent unemployment and the permanence of economic shocks," Journal of Monetary Economics, Elsevier, vol. 6(4), pages 467-492, October. [Downloadable!] (restricted)
  18. Figlewski, Stephen & Wachtel, Paul, 1981. "The Formation of Inflationary Expectations," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 1-10, February. [Downloadable!] (restricted)
  19. Tobin, James, 1977. "How Dead Is Keynes?," Economic Inquiry, Oxford University Press, vol. 15(4), pages 459-68, October.
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  20. Robert E. Hall, 1980. "Labor Supply and Aggregate Fluctuations," NBER Working Papers 0385, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  21. Grossman, Sanford J, 1981. "An Introduction to the Theory of Rational Expectations under Asymmetric Information," Review of Economic Studies, Blackwell Publishing, vol. 48(4), pages 541-59, October. [Downloadable!] (restricted)
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  1. B. Douglas Bernheim, 1988. "How Do the Elderly Form Expectations? An Analysis of Responses to New Information," NBER Working Papers 2719, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Hugo Benítez-Silva & Debra Dwyer & Wayne-Roy Gayle & Thomas Muench, 2008. "Expectations in micro data: rationality revisited," Empirical Economics, Springer, vol. 34(2), pages 381-416, March. [Downloadable!] (restricted)
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