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Expectations and reflexiveness

Abstract

This chapter starts by reconstructing an argument from Oskar Morgenstern against the possibility of economic forecasting which explains economic forecast failure by pinpointing forecast reflexiveness. Subsequently, two lines of attack against this argument are presented. One of them consists in the proposal by Grunberg & Modigliani to construct self-fulfilling forecasts. The other one is based on the rational expectations hypothesis. However, it is shown that both of these counterarguments either fail or give rise to new explanations of forecast failure. Thus, whether the critiques are appropriate or not, forecast failure can be explained with reference to expectations and reflexiveness.

Keywords

Price Level Marginal Utility Money Supply Rational Expectation Economic Agent 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Deutscher Universitäts-Verlag | GWV Fachverlage GmbH, Wiesbaden 2006

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