Survey Data on Expectations: What Have We Learnt?

G. S. Maddala
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G. S. Maddala: University of Florida

Chapter 12 in Issues in Contemporary Economics, 1991, pp 319-344 from Palgrave Macmillan

Abstract: Abstract Expectations play a major role in all economic activity. They are so ubiquitous in all economic modelling that it is not necessary to dwell on this issue at length. Early models of expectation were mostly extrapolative and the most popular model in the 1950s was the adaptive expectations model. Around 1960, Muth suggested that theories of expectation formation should be consistent with the economic model being considered and he said that, for lack of a better term, he would use the word ‘rational’ (Muth, 1961). In the 1970s, mainly with the impetus of Robert E. Lucas, Jr, the rational expectations model took off and now almost every paper published with the word ‘expectations’ in its title comes with a prefix ‘rational’.

Keywords: Forecast Error; Rational Expectation; Foreign Exchange Market; Expectation Model; Arch Model (search for similar items in EconPapers)
Date: 1991
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DOI: 10.1007/978-1-349-11576-1_12

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