What is the true meaning behind the stochastic hypothesis which assert that E(ε)=0 ?

Authors

  • Tarek DJEDDI National Higher School of Statistics and Applied Economics (ENSSEA: ex-INPS)
  • Said BRIKA Oum El Bouaghi University, Algeria.
  • Achour HAIDOUCHI University of Mohand Oulhadj, Buira, Algeria

DOI:

https://doi.org/10.54960/jfcg.v1i2.12

Keywords:

Rational Expectations, errors, learning model

Abstract

The aim of this Paper is to examine the meaning about the classical hypothesis which claim that the error of expectation equal zero, by mentioning all theories of expectations before and after the REH. The rational expectations paradigm has dominated the field of economics ever since it was introduced some fifty years ago. Recently research in heterogeneous expectations, bounded rationality, and models of learning have gained leverage, and focus has shifted away from the rational expectations hypothesis. Despite these developments over the past few decades, the rational expectations paradigm is still very much the standard way of handling uncertainty in economic theory, and often the rationality assumption is not seriously questioned.

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References

Link htpp//, Karl Whelan. Advanced Macroeconomics Notes, 2015, University College Dublin.viewed 12-03-2015.

James Bullard And John Duffy (2004), Learning and Structural Change in Macroeconomic Data,Louis Research Division,p12

Shaw G, K. (1984), Rational expectations, an elementary exposition, Harvester Press, Great Britain, pp19,20.

Ibid, pp 24- 25.

Seppo. Honkapohja,(1993), Adaptive learning and bounded rationality,European Ecionomic Review.

Alan. E. H.Speight, (1989), consumption, rational expectations and liquidity theory and evidence, Speight, New-York, p(75:78).

Pesaran, M. H. (1989), The Limits to Rational Expectation, Basil Blackwell Ltd, Oxford, UK, p 32

Published

2017-12-30

How to Cite

DJEDDI , T., BRIKA, S., & HAIDOUCHI, A. . (2017). What is the true meaning behind the stochastic hypothesis which assert that E(ε)=0 ?. Journal of Finance & Corporate Governance, 1(2), 45–51. https://doi.org/10.54960/jfcg.v1i2.12

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Section

Articles