Journal Article Stochastic Stability of Short-Run Market Equilibrium: A Comment Get access Nagesh S. Revankar Nagesh S. Revankar State University of New York at Buffalo Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 85, Issue 4, November 1971, Pages 724–727, https://doi.org/10.2307/1882279 Published: 01 November 1971

This paper develops a test of the rational expectations hypothesis advanced by Muth [18]. The framework considered here allows for multiperiod expectations of several endogenous variables, with or without lagged exogenous variables. In conventional (linear) models, the hypothesis implies that the expectations are linear in certain relevant variables, and restricts the coefficients of these variables to be certain functions of the parameters in the imbedding model. The test is developed as a test of the validity of these restrictions. The paper also treats the estimation problem in some details, under the alternative hypothesis which is taken as simply the negation of the rational expectations hypothesis.

[We introduce and analyze a class of variable elasticity of substitution (VES) production functions for which the substitution parameter varies linearly with the capital-labor ratio around the intercept term of unity. The VES function contains as special cases the more important special cases of the well known CES function. In terms of some familiar economic relationships, the VES posits a linear view of the world in contrast to the log-linear view posited by the CES function.]

Nagesh S. Revankar, Naoyuki Yoshino, An `Expanded Equation' Approach to Weak-Exogeneity Tests in Structural Systems and a Monetary Application, The Review of Economics and Statistics, Vol. 72, No. 1 (Feb., 1990), pp. 173-177