Date: 2010
Type: Article
Do expectations matter? : the great moderation revisited
American economic journal : macroeconomics, 2010, Vol. 2, No. 3, pp. 183-205
CANOVA, Fabio, GAMBETTI, Luca, Do expectations matter? : the great moderation revisited, American economic journal : macroeconomics, 2010, Vol. 2, No. 3, pp. 183-205
- https://hdl.handle.net/1814/36637
Retrieved from Cadmus, EUI Research Repository
We examine the role of expectations in the Great Moderation episode. We derive theoretical restrictions in a New-Keynesian model and test them using measures of expectations obtained from survey data, the Greenbook and bond markets. Expectations explain the dynamics of inflation and interest rates but their importance is roughly unchanged over time. Systems with and without expectations display similar reduced form characteristics. Results are robust to changes in the structure of the empirical model.
Cadmus permanent link: https://hdl.handle.net/1814/36637
Full-text via DOI: 10.1257/mac.2.3.183
ISSN: 1945-7707; 1945-7715
External link: https://www.aeaweb.org/articles.php?doi=10.1257/mac.2.3.183
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