extrapolative expectations

extrapolative expectations

DEPENDENT VARIABLE from a value of the INDEPENDENT VARIABLE that is beyond the range of observed independent variables and outside the range; the trend line may be inaccurate because the underlying relationship may be different over the broader range. By contrast, if we interpolate, i.e. predict a value for the dependent variable from a value of the independent variable that lies within the range of observed independent variables, then the prediction is likely to be more reliable. See FORECASTING.

extrapolative expectations

see EXPECTATIONS.
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16) House prices are affected negatively in the long run by the user cost of capital (interest rates less extrapolative expectations of house price inflation).
Part of the dynamic adjustment shown in this simulation is due to the incorporation of extrapolative expectations in the model.
While extrapolative expectations of future house price growth increase the amplitude of the housing cycles, the key reason for the prolonged dynamics is the time that it takes to achieve a material change in the dwelling stock through new construction.
Recognizing the role of extrapolative expectations in asset pricing will make monetary and macroprudential policy both more robust and more complex.
The same dynamic of extrapolative expectations also plays out in housing markets in the United States and abroad.
However, a particular version of such extrapolative expectations, namely, regressive expectations formation, does find support in the data.
These tests are reported in the next subsections, followed by tests of versions of what Pesaran and Weale (2006) refer to as extrapolative expectations.
Nevertheless, given the simplicity of our approach, we consider the predictions obtained by using this ad hoc form of extrapolative expectations interesting and worthy of more systematic pursuit.
We then evaluate the theory under the assumption that all available (but no future) information is used in an extrapolative expectations format to forecast future dividend payments.
The extrapolative expectations model does not allow people to make use of this information.
We wish to argue that our within-series forecasting results support an extrapolative expectations model (Meeks, 1991).