Comparing behavioural and rational expectations for the US post-war economy

A. Patrick Minford and Chunping Liu ()

No 9132, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The banking crisis has caused a resurgence of interest in behavioural models of expectations in macroeconomics. Here we evaluate behavioural and rational expectations econometrically in a New Keynesian framework, using US post-war data and the method of indirect inference. We find that after full reestimation the model with behavioural expectations is strongly rejected by the data, whereas the standard rational expectations version passes the tests by a substantial margin.

Keywords: Bank crisis; Behavioural expectations; indirect inference; Rational expectations (search for similar items in EconPapers)
JEL-codes: E17 E37 E47 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://cepr.org/publications/DP9132 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Comparing behavioural and rational expectations for the US post-war economy (2014)
Working Paper: Comparing Behavioural and Rational Expectations for the US Post-War Economy (2013)
Working Paper: Comparing behavioural and rational expectations for the US post-war economy (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9132

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9132

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().