Expectations and perceived causality in fiscal policy: an experimental analysis using real world data

Michele Bernasconi (), Oliver Kirchkamp and Paolo Paruolo
Authors registered in the RePEc Author Service: Pieter Omtzigt ()

Economics and Quantitative Methods from Department of Economics, University of Insubria

Abstract: We generate observable expectations about fiscal variables through laboratory experiments using real world data from several European countries as stimuli.We estimate an econometric model of individual expectations for fiscal policy, which nests various theories of expectations-forming and encompasses both micro- and macro- economic lines of research on fiscal policy. Agents' expectations are found neither to be consistent with rational nor with purely adaptive expectations. Expectations follow an augmented-adaptive scheme, which embodies the "spend and tax hypothesis" on the relationship between taxes and expenditure to a greater extent than in real world data. We relate this findings to current research on the effects of fiscal policy. Methodological implications of the present approach for experiments in macroeconomics are also discussed.

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)
Pages: 53 pages
Date: 2003-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.eco.uninsubria.it/RePEc/pdf/QF2002_42.pdf (application/pdf)

Related works:
Working Paper: Expectations and Perceived Causality in Fiscal Policy: An Experimental Analysis Using Real World Data (2003)
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:ins:quaeco:qf0224

Access Statistics for this paper

More papers in Economics and Quantitative Methods from Department of Economics, University of Insubria Contact information at EDIRC.
Bibliographic data for series maintained by Segreteria Dipartimento ().