Testing rationality of price expectations on the basis of contingency tables
AbstractA method of analyzing rationality of expectations of economic agents, based on contingency tables, is applied to price expectations of Polish industrial enterprises. The source of data are surveys designed by the Economic Development Institute of the Warsaw School of Economics within the framework of business conditions surveys in industry. Empirical results clearly show that expectations of Polish entrepreneurs are not formed rationally. Rationality condition is confirmed in such a limited number of cases that it is not even feasible to differentiate between private and public enterprises as far as rationality of their expectations is concerned. Price expectations seem to be even more irrational than industrial production expectations analyzed earlier.
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Bibliographic InfoPaper provided by Department of Applied Econometrics, Warsaw School of Economics in its series Working Papers with number 1.
Length: 18 pages
Date of creation: 22 May 2007
Date of revision:
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price expectations; rationality; survey data; contingency tables;
Find related papers by JEL classification:
- C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
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- Tomasz Łyziak, 2012. "Inflation expectations in Poland," National Bank of Poland Working Papers 115, National Bank of Poland, Economic Institute.
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