İKTİSAT POLİTİKALARININ ETKİNLİĞİ: UYARLAMACI BEKLEYİŞLER VE RASYONEL BEKLENTİLER HİPOTEZİ
THE EFFECTIVENESS OF ECONOMIC POLICIES: ADAPTIVE EXPECTATIONS AND RATIONAL EXPECTATION HYPOTHESIS

Summary/Abstract: This study aims to evaluate the interaction between economic policy practices and expectations within the framework of Rational Expectations and possible results. The discussion of economic policies effectiveness is closely related to how expectations are created and, therefore whether the policy results are correctly predicted. According to the Adaptive Expectations approach, it takes time for economic units, which only take into account past data, to adapt their inflation expectations to actual inflation. There is also a difference between the estimated and actual inflation rates at a given time. As the inflation rate increases actually, the predicted inflation rate becomes lower. The rational expectations approach suggests that inflation forecasts are realized by evaluating all available information, not just past information so that the expected and realized values are also compatible in the short term. The deviation between actual and expected value affects real wages and leads to quantity compliance on production and employment. This development which arises in the short term with the adaptation of the expected and actual values and price. The rational expectations approach indicates that the inflation forecasts are realized not only by past but also evaluating all available information therefore the expected and actual values are compatible in the short term. According to this if the policy makers try to direct production by increasing the money supply systematically, individuals which they have rational expectations will understand the model and discard those policies.

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