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Do fiscal variables affect fiscal expectations? Experiments with real world and lab data

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Author Info

  • Bernasconi, Michele

    ()
    (Università dell'Insubria)

  • Kirchkamp, Oliver

    ()
    (Sonderforschungsbereich 504)

  • Paruolo, Paolo

    ()
    (University of Insubria)

Abstract

We generate observable expectations about fiscal variables through laboratory experiments using real world data from several European countries as stimuli. We compare a VAR model of expectations for data which is presented in a fiscal frame with one for neutrally presented data. We measure the degree to which participants use fiscal data for their forecasts. Agents' expectations are found neither to be consistent with rational nor with purely adaptive expectations but, instead, follow an augmented-adaptive scheme. Methodological implications of the present approach for experiments in macroeconomics are also discussed.

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Bibliographic Info

Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 04-27.

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Length: 49 pages
Date of creation: 26 Jul 2004
Date of revision:
Handle: RePEc:xrs:sfbmaa:04-27

Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, and partial financial support from Italian MIUR grants ex 60% is gratefully acknowledged.
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Keywords: Experiments; fiscal policy; expectations; causality; cointegration; panel data;

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Citations

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Cited by:
  1. Fiore, Annamaria, 2009. "Experimental Economics: Some Methodological Notes," MPRA Paper 12498, University Library of Munich, Germany.
  2. Michael W.M. Roos & Wolfgang J. Luhan, 2008. "Are Expectations Formed by the Anchoring-and-adjustment Heuristic? – An Experimental Investigation," Ruhr Economic Papers 0054, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  3. Michael W.M. Roos & Ulrich Schmidt, 2011. "The importance of time series extrapolation for macroeconomic expectations," Kiel Working Papers 1723, Kiel Institute for the World Economy.
  4. John Duffy, 2008. "Macroeconomics: A Survey of Laboratory Research," Working Papers 334, University of Pittsburgh, Department of Economics, revised Jun 2014.
  5. Oliver Kirchkamp & Michele Bernasconi & Paolo Paruolo, 2006. "Do fiscal variables affect fiscal expectations? Experiments with real world and lab data," CRIEFF Discussion Papers 0608, Centre for Research into Industry, Enterprise, Finance and the Firm.
  6. Michael W.M. Roos & Wolfgang J. Luhan, 2008. "As if or What? – Expectations and Optimization in a Simple Macroeconomic Environment," Ruhr Economic Papers 0055, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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