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| Title: | | Comparing behavioural and rational expectations for the US post-war economy  |
| Authors: | | Liu, Chunping Minford, Patrick |
| Issue Date: | | 2012 |
| Series/Report no.: | | Cardiff Economics Working Papers E2012/21 |
| 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 re-estimation the model with behavioural expectations is strongly rejected by the data, whereas the standard rational expectations version passes the tests by a substantial margin. |
| Subjects: | | behavioural expectation rational expectation bank crisis indirect inference |
| Document Type: | | Working Paper |
| Appears in Collections: | | Cardiff Economics Working Papers
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