The hypothesis that expectations of future values of a variable can be based primarily on its values in the recent past. Compare with rational expectations hypothesis.
- Other models of expectations formation, such as the adaptive expectations hypothesis, are briefly discussed.
- A logically consistent specification of the adaptive expectations hypothesis in continuous time is derived from an underlying discrete time model.
- The authors’ test results show that the German data are consistent with the adaptive expectations hypothesis and the Hungarian data are consistent with the rational expectations hypothesis.
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Line breaks: adap|tive ex¦pect|ations hy¦poth|esis
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