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Non-Fundamental Expectations and Economic Fluctuations: Evidence from Professional Forecasts

  • Keen Meng Choy

    ()

    (National University of Singapore)

  • Kenneth Leong
  • Anthony S. Tay

It is theoretically possible that non-fundamental idiosyncratic shocks to agents’ rational expectations are a source of economic fluctuations. Studies using data on consumer and investor sentiment suggest that this is indeed a significant source of fluctuations. We present the results of a study that uses forecasts from professional forecasters to extract non-fundamental shocks to expectations. In contrast to previous studies, we show that non-fundamental expectations are not a significant source of output fluctuations.

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File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0306.pdf
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Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0306.

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Date of creation: 2003
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Handle: RePEc:nus:nusewp:wp0306
Contact details of provider: Web page: http://www.fas.nus.edu.sg/ecs/index.html
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  33. repec:cup:macdyn:v:7:y:2003:i:1:p:140-69 is not listed on IDEAS
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