This study takes up Keynes' ideas concerning long-term expectations, particularly his notion that expectations are subject to sudden changes with strong effects on economic activity. We start by detailing Keynes' views regarding the nature of expectations and their role in the business cycle. I...

This is a short review of hypotheses on expectations formation in economics. The text focuses on the competition between the notions of rational and extrapolative expectations. A thought experiment is offered to rationalize the ongoing popularity of rational expectations

For Germany and Switzerland, unlike for the US, data from periodic surveys of producing firms exist. These surveys cover questions regarding price setting and output decisions that are relevant for the study of inflation dynamics. The New Keynesian Phillips curve, in particular, holds that...

"The notion that expectations play a key role in economic decision making is a very old one. Over the past 100 years, major advances in the application of this insight in the formulation of economic models have been made in various subfields of economics. The concept of extrapolation, the idea...

This article starts with the conjecture that the subjective element of expectations is important for understanding and measuring the effects of government’s indebtedness on financial market rates. For this purpose we propose a modern model of extrapolative expectations for the Debt-to-GDP...