Implementation of the Logit Model to the Hypothesis for Rational Expectations
The article shows the possibility for implementing the Logit method as an alternative approach, which allows avoiding a great part of the difficulties connected with the construction and estimation of the models with rational expectations. The idea is to use the Logit method for estimating “the degree of adequacy” of the public in respect of the inflation behaviour in Bulgaria during the period 1993-2000. In the model, expectations are defined as rational, when the subjective probabilities of the economic agents compared to the full set of possible results, are really reflecting the objective conditional mathematical probabilities, based on the available information at a defined moment. By specifying a variable of reliability and by comparing its dynamics with the one of inflation, the Logit method allows to test the validity of the hypothesis for rational expectations by means of the principle of correlation. Furthermore the model of inflation and its interaction with the individual solutions is not estimated directly but this is done in respect of the effect of this interaction. The results obtained allow to make conclusions in respect of the structure of the information basis and the process of “training” when forming rational expectations.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): (2001)
Issue (Month): 3 ()
|Contact details of provider:|| Postal: 3, Aksakov Str., 1040, Sofia|
Phone: (+359 2) 810 40 18
Fax: (+359 2) 988 21 08
Web page: http://www.iki.bas.bg
More information through EDIRC
References listed on IDEAS
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.:
- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
- Frydman, Roman, 1982. "Towards an Understanding of Market Processes: Individual Expectations, Learning, and Convergence to Rational Expectations Equilibrium," American Economic Review, American Economic Association, vol. 72(4), pages 652-668, September.
- Bray, Margaret M & Savin, Nathan E, 1986. "Rational Expectations Equilibria, Learning, and Model Specification," Econometrica, Econometric Society, vol. 54(5), pages 1129-1160, September.
- Bray, Margaret, 1982. "Learning, estimation, and the stability of rational expectations," Journal of Economic Theory, Elsevier, vol. 26(2), pages 318-339, April.
- Sims, Christopher A, 1972. "Money, Income, and Causality," American Economic Review, American Economic Association, vol. 62(4), pages 540-552, September.
When requesting a correction, please mention this item's handle: RePEc:bas:econth:y:2001:i:3:p:46-58. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Diana Dimitrova)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.