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This article explores the properties of rational expectations in the context of autoregressive forecasting, the expectations-generating mechanism implicit in the use of distributed lag expectations proxies. The article then tests the rational expectations hypothesis on a specific set of directly observed expectations data. [ABSTRACT FROM AUTHOR]

The dependent variable in a distributed lag model frequently exhibits a distinct seasonal pattern which cannot be attributed to the seasonal behavior of the independent variable. This article illustrates the advantages of using the variable lag model to incorporate these seasonal influences directly into the distributed lag relationship. [ABSTRACT FROM AUTHOR]