Three essays on validity of rational expectations hypotesis for Turkey

According to the rational expectations hypothesis, first introduced by Muth (1961), economic agents make accurate forecasts about the future using all current information effectively. According to the hypothesis, even if the economic agents make incorrect estimates, they shape the expectations for correcting the error made using the current information and do not make systematic mistakes . In this study, the validity of the rational expectations hypothesis for Turkey, using expectations of the macroeconomic variables, is tested. In this context, it is examined whether the expectations are rational or not by examining the unbiasedness and the efficiency of the expectations about the price, interest rate, exchange rate and current account balances. While the efficiency hypothesis is accepted for the expectations of all macroeconomic variables in the findings of the study, the unbiasedness for expectations is rejected. This means that although the current information is being used, economic agents can not make the accurate forecasts. As a result, the rational expectations hypothesis for Turkey for expectations of price, interest rate, foreign exchange rate and current account balance, is rejected.