Lastly, the few dynamic models currently available in the undergraduate curriculum focus exclusively on adaptive expectations
for price setting.
Formulated this way, Cournot is introducing adaptive expectations
, where each player optimizes using last period's endogenous variables to predict what other players will do this period.
These include developing a network-based model of technological diffusion, and introducing financial market constraints and adaptive expectations
The empirical analysis based on OLS, GLS and GMM reveal that international oil prices, money supply, bilateral exchange rate of Pak-rupee with US-dollar, tax revenue collection as ratio of manufacturing sector value added, energy import-gap ratio and adaptive expectations
are critical determinants, which positively contribute to the energy inflation.
models fell out of favour during the rational expectations revolution of the 1970s and 1980s, as they appeared to imply that investors would make systematic forecasting errors.
Further, hypothesis tests on statistical models implied by conventional adaptive expectations
do not suggest the prevalence of such behavior in the data.
Abstract: This study explores the macroeconomic implications of adaptive expectations
in a standard real business cycle model.
c) inflation induced by adaptive expectations
Cogley's (2002) exponentially smoothed (ES) measure of core inflation is based on the theory of adaptive expectations
and by construction, responds strongly to 'sustained' movements in the general price level (see box 1).
4); determinism and irreversibility are likewise not equivalent concepts; and any path created by an idiosyncratic act of human agency is not the same as a sequence of economic changes involving large fixed costs, learning effects, coordination effects, and adaptive expectations
in the sense used in path-dependence theory and research.
On the other hand, more sophisticated treatments of the adaptive expectations
hypothesis, mostly appearing in the recent literature on learning in macroeconomic models, have found less tendency toward instability at low inflation rates.
226) asserts that "the sole evidence regarding Phillips's contribution to the theory of adaptive expectations
rests on Leeson's report that Friedman communicated to him (orally or in writing, we are not told) that he got the idea from a conversation with Phillips which took place over four decades ago.