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Macroeconomic Rationality and Lucas' Misperceptions Model: Further Evidence from Forty-One Countries

Author

Listed:
  • Nicholas Aspergis

    (University of Macedonia)

  • Stephen M. Miller

    (University of Nevada, Las Vegas, and University of Connecticut)

Abstract

Several researchers have examined Lucas's misperceptions model as well as various propositions derived from it within a cross-section empirical framework. The cross-section approach imposes a single monetary policy regime for the entire period. Our paper innovates on existing tests of those rational expectations propositions by allowing the simultaneous effect of monetary and short run aggregate supply (oil price) shocks on output behavior and the employment of advanced panel econometric techniques. Our empirical findings, for a sample of 41 countries over 1949 to 1999, provide evidence in favor of the majority of rational expectations propositions.

Suggested Citation

  • Nicholas Aspergis & Stephen M. Miller, 2003. "Macroeconomic Rationality and Lucas' Misperceptions Model: Further Evidence from Forty-One Countries," Working papers 2003-26, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2003-26
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    References listed on IDEAS

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    5. Hakes, David R & Gamber, Edward N, 1992. "Does the Federal Reserve Respond to Errant Money Growth? Evidence from Three Monetary Regimes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(1), pages 127-134, February.
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    8. Richard T. Froyen & Roger N. Waud, 1983. "The Changing Relationship Between Aggregate Price and Output: The British Experience," NBER Working Papers 1134, National Bureau of Economic Research, Inc.
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    13. Attfield, Clifford L F & Duck, Nigel W, 1983. "The Influence of Unanticipated Money Growth on Real Output: Some Cross-Country Estimates," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(4), pages 442-454, November.
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    15. Hercowitz, Zvi, 1983. "Anticipated Inflation, the Frequency of Transactions, and the Slope of the Phillips Curve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 15(2), pages 139-154, May.
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    17. Jung, W. S., 1985. "Output-inflation tradeoffs in industrial and developing countries," Journal of Macroeconomics, Elsevier, vol. 7(1), pages 101-113.
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    Cited by:

    1. Cone, Thomas E., 2008. "Optimal information acquisition and monetary policy," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1370-1389, December.

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    More about this item

    Keywords

    Lucas's misperception model; rational expectations propositions; real shocks; panel data;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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