Usefulness of Adaptive and Rational Expectations in Economics

Gregory Chow
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Gregory Chow: Princeton University

No 1334, Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: This paper provides a statistical reason and strong econometric evidence for supporting the adaptive expectations hypothesis in economics. It points out why the rational expectations hypothesis was embraced by the economics profession without sufficient evidence. Finally it will summarize the conditions under which these two competing hypotheses can be used effectively.

Keywords: macroeconomics; adaptive expectations; rational expectations (search for similar items in EconPapers)
JEL-codes: E00 (search for similar items in EconPapers)
Date: 2011-09
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:221

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