Usefulness of Adaptive and Rational Expectations in Economics

Gregory C. Chow

31 citations0/0 files storedRePEc: Research Papers in Economics

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Monetary Policy and Economic Impact Forecasting Techniques and Applications Economic theories and models

Abstract

Abstract: This paper provides a statistical reason and strong econometric evidence for supporting the adaptive expectations hypothesis in economics. It points out why the rational expectations hypothesis was embraced by the economics profession without sufficient evidence. Finally it will summarize the conditions under which these two competing hypotheses can be used effectively. JEL Classification: E00 Key words: macroeconomics, adaptive expectations, rational expectations

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References

1976Econometric policy evaluation: A critique 1958A Theory of the Consumption Function 2018China’s economic transformation 1962The Demand for Durable Goods, ouvrage collectif sous la direction d'Arnold C. Harberger. Chicago: University of Chicago Press [Toronto: University of Toronto Press]. 1960. Pp. viii, 274. $6.00.1991Rational Versus Adaptive Expectations in Present Value Models 1960Demand for Automobiles in the United States: A Study in Consumer Durables

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