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

Oliver Kirchkamp, Michele Bernasconi and Paolo Paruolo

No 608, CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: 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 find that participants understand the meaning of the fiscal variables, but also that their ability to perceive the correct characteristics of fiscal policy is limited. We tie the VAR analysis to specific models of forming expectations. We find that agents’ expectations are neither consistent with rational nor with purely adaptive expectations but, instead, follow an augmented-adaptive scheme

Keywords: Experiments; fiscal policy; expectations; causality; cointegration; panel data. (search for similar items in EconPapers)
JEL-codes: C91 D89 E62 H31 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-exp, nep-mac and nep-pbe
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Related works:
Journal Article: Do fiscal variables affect fiscal expectations? Experiments with real world and lab data (2009)
Working Paper: Do fiscal variables affect fiscal expectations? Experiments with real world and lab data (2009)
Working Paper: Do fiscal variables affect fiscal expectations?: Experiments with real world and lab data (2004)
Working Paper: Do fiscal variables affect fiscal expectations? Experiments with real world and lab data (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:0608

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