Rational Expectation Hypothesis: An Application of the Blanchard and Khan Approach

Almeida, Charles Lima; Moreira, Tito Belchior Silva; Souza, Geraldo Silva

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Rational Expectation Hypothesis: An Application of the Blanchard and Khan Approach

Economics Bulletin, Vol.3, No. 22, pp. 1-9, 2004

10 Pages Posted: 15 Jun 2009 Last revised: 27 Jan 2012

See all articles by Charles Lima Almeida

Geraldo Silva Souza

University of Brazil

Date Written: June 15, 2009

Abstract

This paper uses the solution of the linear difference model under rational expectation of Blanchard and Kahn (1980) to test the validity of the inflation stickiness and the Rational Expectattion Hypotheses for the Brazilian economy during the period frm 06/95 to 09/02. Using the Fuhrer - Moore model and GMM we find evidence favoring both hypothesis.

Keywords: REH, inflation stickiness, GMM

Suggested Citation: Suggested Citation

Almeida, Charles Lima and Moreira, Tito Belchior Silva and Souza, Geraldo Silva, Rational Expectation Hypothesis: An Application of the Blanchard and Khan Approach (June 15, 2009). Economics Bulletin, Vol.3, No. 22, pp. 1-9, 2004, Available at SSRN: https://ssrn.com/abstract=1420193