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What does adaptive expectations mean?
- Adaptive expectations
- In economics, adaptive expectations is a hypothesized process by which people form their expectations about what will happen in the future based on what has happened in the past. For example, if inflation has been higher than expected in the past, people would revise expectations for the future. One simple version of adaptive expectations is stated in the following equation, where p e {\displaystyle p^{e}} is the next year's rate of inflation that is currently expected; p − 1 e {\displaystyle p_{-1}^{e}} is this year's rate of inflation that was expected last year; and p {\displaystyle p} is this year's actual rate of inflation:
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"adaptive expectations." Abbreviations.com. STANDS4 LLC, 2024. Web. 5 Jun 2024. <https://www.abbreviations.com/adaptive%20expectations>.
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