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Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise

Charles Manski ()

No 23418, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Economists commonly suppose that persons have probabilistic expectations for uncertain events, yet empirical research measuring expectations was long rare. The inhibition against collection of expectations data has gradually lessened, generating a substantial body of recent evidence on the expectations of broad populations. This paper first summarizes the history leading to development of the modern literature and overviews its main concerns. I then describe research on three subjects that should be of direct concern to macroeconomists: expectations of equity returns, inflation expectations, and professional macroeconomic forecasters. I also describe work that questions the assumption that persons have well-defined probabilistic expectations and communicate them accurately in surveys. Finally, I consider the evolution of thinking about expectations formation in macroeconomic policy analysis. I favorably observe the increasing willingness of theorists to study alternatives to rational expectations assumptions, but I express concern that models of expectations formation will proliferate in the absence of empirical research to discipline thinking. To make progress, I urge measurement and analysis of the revisions to expectations that agents make following occurrence of unanticipated shocks.

JEL-codes: D84 E03 E66 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-mac
Date: 2017-05
Note: EFG
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Published as Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise , Charles F. Manski. in NBER Macroeconomics Annual 2017, volume 32 , Eichenbaum and Parker. 2018

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Journal Article: Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise (2018) Downloads
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