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In 1968 Shirley Chisholm became the first Black woman elected to the United States Congress. In 1972 she launched a campaign for the Democratic presidential nomination, breaking another political barrier.
MORE →Reflects the personal views, recollections, and perspective of the author, Mike Davis.
This is a personal recollection on the Move fire on May 13, 1985
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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 people want to create an expectation of the inflation rate in the future, they can refer to past inflation rates to infer some consistencies and could derive a more accurate expectation the more years they consider.
One simple version of adaptive expectations is stated in the following equation, where is the next year's rate of inflation that is currently expected; is this year's rate of inflation that was expected last year; and is this year's actual rate of inflation:
where is between 0 and 1.[1] This says that current expectations of future inflation reflect past expectations and an "error-adjustment" term, in which current expectations are raised (or lowered) according to the gap between actual inflation and previous expectations. The error-adjustment term, also called partial adjustment, allows for variations in inflation rates over the previous years, especially years that have abnormally high or low rates.
The above term is the partial adjustment error term, this term allows for variances that occur between actual values and expected values. The importance of considering the error prevents over and under expecting values of in the above example inflation rates. The adjustment means that the expectation can tend toward the direction of the future expected value that would be closer to the actual value, this allows a prediction to be made and consideration to be added or removed so as to be accurate of the future expectation. This consideration or error term is what allows the predicted value to be adaptable, thus creating an equation that is adaptive of the expectation being inferred.
The theory of adaptive expectations can be applied to all previous periods so that current inflationary expectations equal:
where equals actual inflation years in the past.[2] The adding of a time series portion to the expectation equations accounts for multiple previous years and their respective rates in forecasting like the above example of the future inflation rate. Thus, current expected inflation reflects a weighted average of all past inflation rates, where the weights get smaller and smaller as we move further in to the past. The initial previous year has the highest weighting and the subsequent years take lesser weighting the further back the equation accounts for.
When an agent makes a forecasting error (as in incorrectly recording a value or mistyping), the stochastic shock will cause the agent to incorrectly forecast the price expectation level again even if the price level experiences no further shocks, since the previous expectations only ever incorporates part of their errors. The backward nature of expectation formulation and the resultant systematic errors made by agents (see cobweb model) had become unsatisfactory to economists such as John Muth, who was pivotal in the development of an alternative model of how expectations are formed, called rational expectations. The use of rational expectations have largely replaced adaptive expectations in macroeconomic theory since its assumptions rely on an optimal expectations approach which is consistent with economic theory. However, it must be stressed that confronting adaptive expectations and rational expectations aren't necessarily justified by either use, in other words, there are situations in which following the adaptive scheme is a rational response.
The first use adaptive expectations hypothesis was to describe agent behavior in The Purchasing Power of Money by Irving Fisher (1911), then later used to describe models such as hyperinflation by Philip Cagan (1956).[3] Adaptive expectations were instrumental in the consumption function (1957) and Phillips curve outlined by Milton Friedman. Friedman suggests that workers form adaptive expectations of the inflation rate, the government can easily surprise them through unexpected monetary policy changes. As agents are trapped by the money illusion, they are unable to correctly perceive price and wage dynamics, so based on Friedman's theory, unemployment can always be reduced through monetary expansions. If the government chooses to fix a low unemployment rate the result is an increasing level of inflation for an extended period of time. However, in this framework, it is clear why and how adaptive expectations are problematic. Agents are arbitrarily supposed to ignore sources of information which, otherwise, would affect their expectations. For example, government announcements are such sources. Agents are expected to modify their expectations and break with the former trends when changes in economic policy necessitate it. This is the reason why the theory of adaptive expectations is often regarded as a deviation from the rational tradition of economics.[4]
Source: Wikipedia. Article content is retrieved live through the MediaWiki API.
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 people want to create an expectation of the inflation rate in the future, they can refer to past inflation rates to infer some consistencies and could derive a more accurate expectation the more years they consider. 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: p e = p − 1 e + λ ( p − p − 1 e ) {\displaystyle p^{e}=p_{-1}^{e}+\lambda (p-p_{-1}^{e})} where λ {\displaystyle \lambda } is between 0 and 1. This says that current expectations of future inflation reflect past expectations and an "error-adjustment" term, in which current expectations are raised (or lowered) according to the gap between actual inflation and previous expectations. The error-adjustment term, also called partial adjustment, allows for variations in inflation rates over the previous years, especially years that have abnormally high or low rates. λ ( p − p − 1 e ) {\displaystyle \lambda (p-p_{-1}^{e})} The above term is the partial adjustment error term, this term allows for variances that occur between actual values and expected values. The importance of considering the error prevents over and under expecting values of in the above example inflation rates. The adjustment means that the expectation can tend toward the direction of the future expected value that would be closer to the actual value, this allows a prediction to be made and consideration to be added or removed so as to be accurate of the future expectation. This consideration or error term is what allows the predicted value to be adaptable, thus creating an equation that is adaptive of the expectation being inferred. The theory of adaptive expectations can be applied to all previous periods so that current inflationary expectations equal: p t e = λ ∑ j = 0 ∞ ( 1 − λ ) j p t − j {\displaystyle p_{t}^{e}=\lambda \sum _{j=0}^{\infty }(1-\lambda )^{j}p_{t-j}} where p t − j {\displaystyle p_{t-j}} equals actual inflation j {\displaystyle j} years in the past. The adding of a time series portion to the expectation equations accounts for multiple previous years and their respective rates in forecasting like the above example of the future inflation rate. Thus, current expected inflation reflects a weighted average of all past inflation rates, where the weights get smaller and smaller as we move further in to the past. The initial previous year has the highest weighting and the subsequent years take lesser weighting the further back the equation accounts for. When an agent makes a forecasting error (as in incorrectly recording a value or mistyping), the stochastic shock will cause the agent to incorrectly forecast the price expectation level again even if the price level experiences no further shocks, since the previous expectations only ever incorporates part of their errors. The backward nature of expectation formulation and the resultant systematic errors made by agents (see cobweb model) had become unsatisfactory to economists such as John Muth, who was pivotal in the development of an alternative model of how expectations are formed, called rational expectations. The use of rational expectations have largely replaced adaptive expectations in macroeconomic theory since its assumptions rely on an optimal expectations approach which is consistent with economic theory. However, it must be stressed that confronting adaptive expectations and rational expectations aren't necessarily justified by either use, in other words, there are situations in which following the adaptive scheme is a rational response. The first use adaptive expectations hypothesis was to describe agent behavior in The Purchasing Power of Money by Irving Fisher (1911), then later used to describe models such as hyperinflation by Philip Cagan (1956). Adaptive expectations were instrumental in the consumption function (1957) and Phillips curve outlined by Milton Friedman. Friedman suggests that workers form adaptive expectations of the inflation rate, the government can easily surprise them through unexpected monetary policy changes. As agents are trapped by the money illusion, they are unable to correctly perceive price and wage dynamics, so based on Friedman's theory, unemployment can always be reduced through monetary expansions. If the government chooses to fix a low unemployment rate the result is an increasing level of inflation for an extended period of time. However, in this framework, it is clear why and how adaptive expectations are problematic. Agents are arbitrarily supposed to ignore sources of information which, otherwise, would affect their expectations. For example, government announcements are such sources. Agents are expected to modify their expectations and break with the former trends when changes in economic policy necessitate it. This is the reason why the theory of adaptive expectations is often regarded as a deviation from the rational tradition of economics.
The veil of money is the property assumed by some economists whereby money is a commodity like other commodities – such as oil or gold or food – as opposed to its having special properties. This question arises in classical political economy, where John Stuart Mill argues that money is unimportant, and that while money might disguise the true values in an economy, it would only do so for a limited period of time. This was used to argue against government intervention in political economy as a waste of time. The problem expanded, however, as money swung back toward credit-based issuance of notes. What money meant, or was equivalent to, became important as governments attempted to adjust interest rates rather than maintain the gold standard. In the 20th century the veil of money was used to describe questions of stability and the exchangeability of money for interest or commodity in a macroeconomic model. In essence, as long as money can be treated like a commodity, there is no stickiness between money and goods, or money and interest. The veil of money and, as a related issue, the quantity theory of money have special importance in economic theory throughout the 20th century. Actually, 20th century economics can be interpreted as a sequence of theoretical answers to the question whether money is only a veil or not. Different theories can be judged by their implied ideas as to the neutrality of money. In the simplest models and in the simplest form of the quantity theory of money, money is completely neutral, that is, changes in the money supply do not affect anything real. However, in the more elaborated models the neutrality theorem was applied rather to long-run considerations. For both Milton Friedman and Robert E. Lucas money was not a mere veil in the short run, so money was assumed to have real effects in the short run. The mechanisms through which money could exert these real effects were radically different and so were the sets of assumptions these authors created to establish their models. For example, Friedman postulated adaptive expectations, while Lucas assumed his economic agents to be able to form rational expectations. For both of them, money was only neutral in the long-run – that is, money was not just a veil in the short-run – but the scope of countercyclical economic policy was radically curtailed in new classical macroeconomics. In the case of rational expectations the monetary authority is not able to carry out systematic countercyclical economic policy – that is, it cannot exploit the existing short-run Phillips curve. However, it can be realized that if any of the conditions necessary to the ineffectiveness of systematic economic policy is not met, economic policy can be effective again, so, money is not only a veil.
Great Expectations is the thirteenth novel by the English author Charles Dickens and his penultimate completed novel. The novel is a bildungsroman and depicts the education of an orphan nicknamed Pip. It is Dickens' second novel, after David Copperfield, to be fully narrated in the first person. The novel was first published as a serial in Dickens's weekly periodical All the Year Round, from 1 December 1860 to August 1861. In October 1861, Chapman & Hall published the novel in three volumes. The novel is set in Kent and London in the early to mid-19th century and contains some of Dickens's most celebrated scenes, starting in a graveyard, where the young Pip is accosted by the escaped convict Abel Magwitch. Great Expectations is full of extreme imagery—poverty, prison ships, chains, and fights to the death—and features a colourful cast of characters who have entered popular culture. These include the eccentric Miss Havisham, the beautiful but cold Estella, and Joe Gargery, the unsophisticated and kind blacksmith. Dickens's themes include wealth and poverty, love and rejection, and the eventual triumph of good over evil. Great Expectations, which is popular with both readers and literary critics, has been translated into many languages and adapted numerous times into various media. The novel was very widely praised. Although Dickens's contemporary Thomas Carlyle referred to it disparagingly as "that Pip nonsense", he nevertheless reacted to each fresh instalment with "roars of laughter". Later, George Bernard Shaw praised the novel, describing it as "all of one piece and consistently truthful". During the serial publication, Dickens was pleased with public response to Great Expectations and its sales; when he first conceived the plot, he called it "a very fine, new and grotesque idea". In the 21st century, the novel retains good standing among literary critics and in 2003 it was ranked 17th in the BBC's The Big Read poll.
Rational expectations is a set of modeling assumptions describing how macroeconomic agents form expectations about the future under uncertainty. Under these assumptions, agents are presumed to use all relevant and available information, making their expectations “model‑consistent”—that is, behaving as if they fully understand the structural model governing the macroeconomy.
Before the 1921 destruction of Tulsa’s Greenwood District, Black residents had created a remarkable center of business and community life. The district included stores, professional offices, entertainment venues and homes owned by Black citizens. Understanding Greenwood means learning what was built—not only what was burned.
MORE →The Greenwood District.
