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

  • Bernasconi, Michele

    ()

    (Università dell'Insubria)

  • Kirchkamp, Oliver

    ()

    (Sonderforschungsbereich 504)

  • Paruolo, Paolo

    ()

    (University of Insubria)

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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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
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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