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

Liu, Chunping and Minford, Patrick 2012. Comparing behavioural and rational expectations for the US post-war economy. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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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.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Publisher:	Cardiff University
Date of First Compliant Deposit:	30 March 2016
Last Modified:	07 Oct 2015 15:14
URI:	https://orca.cardiff.ac.uk/id/eprint/77944

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