Original article Microeconomics

Empirical test of expectations formation hypotheses: a study beyond individual rationality

Anton Gerunov - Sofia University St. Kliment Ohridski
Received: 10 Jun 2022
Revised:
Published:
Downloads: 0
Citations: 0
Issue 2/2015
JEL E31 D84
DOI https://doi.org/10.56497/etj1560204

Abstract

The main hypotheses for the formation of inflation expectations of economic agents and key results of their research are discussed. Survey data on the inflation expectations of the citizens of the EU-27 member states for the period 01.1998-05.2013 are used to test the extent to which these theoretical hypotheses correspond to the dynamics actually observed. Econometrically, it is argued that the adaptive and rational expectations approaches present an incomplete picture of the process, while the dynamic heterogeneous expectations approach more fully describes observable empirical trends.

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