Macroeconomic Rationality and Lucas' Misperceptions Model: Further Evidence from Forty-One Countries

Nicholas Aspergis and Stephen Miller
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Nicholas Aspergis: University of Macedonia

No 2003-26, Working papers from University of Connecticut, Department of Economics

Abstract: Several researchers have examined Lucas's misperceptions model as well as various propositions derived from it within a cross-section empirical framework. The cross-section approach imposes a single monetary policy regime for the entire period. Our paper innovates on existing tests of those rational expectations propositions by allowing the simultaneous effect of monetary and short run aggregate supply (oil price) shocks on output behavior and the employment of advanced panel econometric techniques. Our empirical findings, for a sample of 41 countries over 1949 to 1999, provide evidence in favor of the majority of rational expectations propositions.

Keywords: Lucas's misperception model; rational expectations propositions; real shocks; panel data (search for similar items in EconPapers)
JEL-codes: E12 E13 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2003-08
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Journal of Economics and Business, May-June 2004

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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2003-26

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