Abstract
The modelling of economic expectations is central to economics. Expectations of future economic conditions can be represented in econometric models by survey data, expectations proxies such as adaptive expectations, expert forecasts, or market expectations. The theory that expectations are rational, that is, optimal forecasts given the model, can be a useful modelling device, but evidence from behavioural economics shows that it has important limitations.
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Shiller, R.J. (2018). Expectations. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_407
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DOI: https://doi.org/10.1057/978-1-349-95189-5_407
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