Unbiased Adaptive Expectation Schemes

Antonio Palestrini () and Mauro Gallegati

Economics Bulletin, 2015, vol. 35, issue 2, 1185-1190

Abstract: There are situations in which the old-fashioned adaptive expectation process seems to provide a good description of agents' behavior (Chow, 2011). Unfortunately, this expectation scheme may not satisfy the necessary rationality condition (unconditional mean-zero error). This paper shows how to simply fix the problem introducing a bias correction term.

Keywords: Adaptive expectations; unbiased errors. (search for similar items in EconPapers)
JEL-codes: C2 D8 (search for similar items in EconPapers)
Date: 2015-05-14
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Citations: View citations in EconPapers (4)

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