Endogenous inferential expectations
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Previous research on inferential expectations (IE) (Menzies and Zizzo, 2009) has only considered a test statistic that is exogenous, based on time. This thesis examines the theory of IE for a test statistic that is endogenously determined, and incorporates IE into the standard cobweb model. Three applications are developed; an IE cobweb model nested in adaptive expectations, IE employed to estimate the value of a new parameter, and an IE model which generalises econometric learning. Under the latter, it is shown that belief conservatism results in greater forecast errors, even in a model where equilibrium outcomes are dependent on expectations.
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