Usefulness of Adaptive and Rational Expectations in Economics
Abstract
This paper provides a statistical reason and strong econometric evidence for supporting the adaptive expectations hypothesis in economics. It points out why the rational expectations hypothesis was embraced by the economics profession without sufficient evidence. Finally it will summarize the conditions under which these two competing hypotheses can be used effectively.Download Info
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Paper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1334.Length:
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:pri:cepsud:1334
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Related research
Keywords: macroeconomics; adaptive expectations; rational expectations;Find related papers by JEL classification:
- E00 - Macroeconomics and Monetary Economics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-CBA-2011-10-15 (Central Banking)
- NEP-CBE-2011-10-15 (Cognitive & Behavioural Economics)
- NEP-MAC-2011-10-15 (Macroeconomics)
- NEP-UPT-2011-10-15 (Utility Models & Prospect Theory)
References
References listed on IDEASPlease 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.:
- Chow, G.C., 1988.
"Rational Versus Adaptive Expectations In Present Value Models,"
Papers
328, Princeton, Department of Economics - Econometric Research Program.
- Chow, Gregory C, 1989. "Rational versus Adaptive Expectations in Present Value Models," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 376-84, August.
- Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
- Chow, Gregory C., 1997. "Dynamic Economics: Optimization by the Lagrange Method," OUP Catalogue, Oxford University Press, number 9780195101928, September.
Citations
Blog mentions
As found by EconAcademics.org, the blog aggregator for Economics research:- Adaptive versus rational expectations
by Economic Logician in Economic Logic on 2011-11-04 14:20:00
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