Econometrica: Jan 1976, Volume 44, Issue 1

Rational Expectations and the Natural Rate Hypothesis: Some Consistent Estimates

https://doi.org/0012-9682(197601)44:1<43:REATNR>2.0.CO;2-7
p. 43-52

B. T. McCallum

Proceeding under the assumption that expectations are formed rationally, this paper describes a procedure for consistent estimation of equations involving unobservable expectational variables and then, using this procedure, develops empirical results bearing on the validity of the natural rate hypothesis. Estimates assuming partial rationality are also reported.

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