On the 'restricted cointegration test' as a test of the rational expectations hypothesis*

C-Tier
Journal: Applied Economics
Year: 1998
Volume: 30
Issue: 2
Pages: 269-278

Score contribution per author:

1.005 = (α=2.01 / 1 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

One of the main consequences of the 'cointegration revolution' on the domain of the direct tests of the rational expectations hypothesis (REH) was the substitution of the 'restricted cointegration test' (RCT) for the 'unbiasedness test'. However, the results of a Monte Carlo study show that a simple <italic>t</italic>-test can be much more powerful than the RCT. It is argued that the RCT is adequate to investigate the 'asymptotic rationality' but that it is not sufficient to assess the Muthian rationality of expectations. The discussion is empirically illustrated with the test of the REH for the Portuguese retail trade inflation expectations.

Technical Details

RePEc Handle
repec:taf:applec:v:30:y:1998:i:2:p:269-278
Journal Field
General
Author Count
1
Added to Database
2026-01-29