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http://bura.brunel.ac.uk/handle/2438/880
Title: | Testing Myopia in Economic Models |
Authors: | Martin, C |
Keywords: | myopia, testing, price adjustment |
Issue Date: | 2000 |
Publisher: | Brunel University |
Citation: | Economics and Finance Working Papers, Brunel University, 00-03 |
Abstract: | This paper suggests a simple test of whether agents are forward-looking or myopic that can be implemented on the type of backward-looking econometric models that are usually estimated.. We argue that myopic behaviour implies a simple parametric restriction that will not hold if agents are forward-looking. We illustrate our tests by examining price adjustment in the UK using aggregate quarterly data from 1963-1997. Our evidence strongly suggests that pricesetting is forward-looking and not myopic. |
URI: | http://bura.brunel.ac.uk/handle/2438/880 |
Appears in Collections: | Economics and Finance Dept of Economics and Finance Research Papers |
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