Discussion Papers no. 226
Tests based on Norwegian export prices
Rational expectations in price setting
This paper uses imperfect competition as a basis for modelling the export price for an aggregated commodity produced by the Norwegian private mainland economy. The long run solution is analysed using a cointegration technique. The dynamics are modelled according to two different approaches; a backward looking error correction model and a forward looking model where rational expectations are assumed. The dynamic structure of the forward looking model is derived from a linear quadratic adjustment cost function under rational expectations, but the empirical results do not support this specification. We cannot reject super-exogeneity to be present in the backward looking error correction model. The empirical evidence are thus not consistent with rational expectations.
Om publikasjonen
- Tittel
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Rational expectations in price setting. Tests based on Norwegian export prices
- Ansvarlig
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Ingvild Svendsen
- Serie og -nummer
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Discussion Papers no. 226
- Utgiver
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Statistics Norway, Research Department
- Emne
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Discussion Papers
- Antall sider
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34
- Målform
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Engelsk
- Om Discussion Papers
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Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.
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