The Theory of Rationally Heterogeneous Expectations
Evidence from Survey Data on Inflation Expectations
Bibliographic Data
| ID | 9714922 |
|---|---|
| Authors | William A Branch (0000-0001-5986-6667, University of California, Irvine, corresponding author) |
| Year | 2004 |
| Volume | 114 |
| Issue | 497 |
| Pages | 592-621 |
| Publication date | 2004-07-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/j.1468-0297.2004.00233.x |
| OpenAlex | W1954737426 |
| Language | EN |
| Citations received | 22 |
| References cited | 26 |
Previous work with survey data on inflationary expectations casts doubt on the Rational Expectations Hypothesis. In this paper, we develop a model of expectation formation where agents form their forecasts of inflation by selecting a predictor function from a set of costly alternatives whereby they may rationally choose a method other than the most accurate. We use this model to test whether survey data exhibit rationally heterogeneous expectations. Maximum likelihood is applied to a new discrete choice setting where the observed variable is continuous and the latent variable is discrete. The results show there is dynamic switching that depends on the relative mean squared errors of the predictors
Econometrics · Economics · Function (biology · Inflation (cosmology · Latent variable · Rational expectations · Set (abstract data type · Statistics · Survey data collection · Variable (mathematics · Computer Science · Economic theories and models · Housing Market and Economics · Mathematics · Monetary Policy and Economic Impact
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Anomalies
| Unique citing works | 22 |
|---|---|
| Citations per year | 0,96 |
| Citation span | 2003 - 2026 (24) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 22 |