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 is the next year's rate of inflation, expected; this says that current expectations of future inflation reflect past expectations and an "error-adjustment" term, in which current expectations are raised according to the gap between actual inflation and previous expectations. This error-adjustment is called "partial adjustment." The theory of adaptive expectations can be applied to all previous periods so that current inflationary expectations equal: p e = λ ∑ j = 0 ∞ where p j equals actual inflation j years in the past. Thus, current expected inflation reflects a weighted average of all past inflation, where the weights get smaller and smaller as we move further in the past.
Once a forecasting error is made by agents, due to a stochastic shock, they will be unable to forecast the price level again if the price level experiences no further shocks since they only incorporate part of their errors. The backward nature of expectation formulation and the resultant systematic errors made by agents was unsatisfactory to economists such as John Muth, pivotal in the development of an alternative model of how expectations are formed, called rational expectations; this has replaced adaptive expectations in macroeconomic theory since its assumption of optimality of expectations is consistent with economic theory. However, it must be stressed that confronting adaptivity and rationality is not justified, in other words, there are situations in which following the adaptive scheme is a rational response. Adaptive expectations were instrumental in the Phillips curve outlined by Milton Friedman. For Friedman, workers form adaptive expectations, so the government can surprise them through unexpected monetary policy changes.
As agents are trapped by the money illusion, they are unable to perceive price and wage dynamics, so, for Friedman, unemployment can always be reduced through monetary expansions. The result is an increasing level of inflation if the government chooses to fix unemployment at a low rate for an extended period of time. However, in this framework it is clear how adaptive expectations are problematic. Agents are arbitrarily supposed to ignore sources of information which, 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 regarded as a deviation from the rational tradition of economics. Policy ineffectiveness proposition Problem of induction Rational expectations Self-fulfilling prophecy Cobweb model George W. Evans and Seppo Honkapohja and Expectations in Macroeconomics.
Princeton University Press, ISBN 978-0-691-04921-2
St. Stan's Brewery is a microbrewery in Modesto, California; the company was established in 1984. In 2017, St. Stan's reopened in downtown Modesto, with a taproom as well as offsite brewing of craft beers by their original brewmaster of 25 years, Bill Coffey, brewing originals such as Red Sky Ale, Whistlestop Pale Ale and Barley Wine, in addition to plans for some new styles; the brewery produced traditional German beer styles. St. Stan's was the first brewery in the United States to brew an Altbier style beer; the brewery was a leader in the microbrewery movement in the 1980s. It was lead plaintiff in a 1997 class-action suit against Anheuser-Busch, which it accused of engaging in anti-competitive practices by coercing or bullying distributors to get them to stop distributing product for smaller breweries. A Justice Department investigation was ended but the class-action lawsuit was unaffected. In 2008, Susan Little-Nell, a former owner of St. Stan's, was one of a number of craft breweries lobbying against an attempt by Anheuser-Busch to get California state law changed to allow it to give out free souvenirs up to $5 value rather than just $.25.
She described the tough situation of small brewers in the face of "free-for-all promotional spending of international corporations." The Nell's operations of St. Stans, both the brewery and the brewpub, closed on an unknown date, sometime in early 2015. Official website
Leonard Fulton Ross was an American lawyer, probate judge, stock raiser who served as a first lieutenant in the Mexican-American War and as a brigadier general during the American Civil War. Leonard F. Ross, third son and fifth child of Ossian M. Ross and Mary Winans, was born in Lewistown, Illinois, on July 7, 1823. Ross moved to Havana, with his family at a young age, for most of his youth, he received little formal schooling. Instead, he helped run his father's ferry service. Following his father's death in 1837, Leonard moved with his mother to Canton, where he received college preparation from students of Illinois College. Ross attended Illinois College for one year, although his graduation date is listed as 1845 in school records, he traveled through parts of neighboring states attempting to collect moneys due the estate of his father. In this endeavor, he was only successful, owing to the aftermath of the financial crash of 1837. Ross subsequently studied law in the office of Davidson and Kellogg of Canton and was admitted to the bar in December, 1844.
He opened a law office in Vermont and practiced law until he enlisted in the Mexican–American War. On November 13, 1845, Leonard Ross married Catharine Mary "Kitty" Simms, a sister of Frances M. Simms, married to Leonard’s brother, Lewis W. Ross. Leonard and Catharine Ross had seven children: Leonard W.. Catharine Ross died on March 1862, while her husband was engaged in the American Civil War. On January 10, 1865, Ross married Mary Elizabeth Warren and four children resulted from that marriage: Cora. During the Mexican–American War, Leonard Ross volunteered in the 4th Illinois Volunteer Infantry Regiment, enlisting in June 1846, he was promoted from the rank of private to first lieutenant on September 4, 1846, by the commanding officer, Captain Lewis W. Ross, his older brother. In a letter to his wife, Captain Ross remarked that Leonard "enjoys his honors well & will make a good officer, he lacks dignaty which I am imparting to him as fast as possible from the surplus which I had of the article on hand."
Leonard Ross subsequently played prominent roles in a number of battles, including the Siege of Veracruz and the Battle of Cerro Gordo. According to a note on a muster roll signed by Captain Ross and dated April 30, 1847, Lieutenant Ross had sent in his resignation by that date and had returned home from the war. However, it was noted by Captain Ross that Lieutenant Ross' resignation was not accepted, so he was considered absent without leave, although there were no adverse consequences. An extensive account of Leonard Ross' service during the Mexican-American War has been provided by the State Historical Society of Iowa. At the outbreak of the Civil War, Ross joined the 17th Illinois Regiment, enlisting on May 25, 1861, he was elected Colonel and fought in this capacity at the battles of Fredericktown, Fort Henry, Fort Donelson. On the first day of fighting at Fort Donelson, Colonel William Ralls Morrison was wounded and Ross assumed command of the brigade, which he led for the remainder of the battle, participating in Lew Wallace's counterattack against the Confederate breakout attempt.
Ross was absent from the Battle of Shiloh, having traveled to Lewistown, Illinois, on March 26, 1862, following news of the death of his wife. Returning to the war, Ross was promoted to brigadier general of volunteers on April 25, 1862. Ross led his brigade during the Siege of Corinth and for a while led the 1st Division of the Army of the Tennessee. After a variety of commands on garrison duty, General Ross was placed in command of the 13th Division of the XIII Corps. On December 25, 1862, in Holly Springs, Ross was arrested by Brigadier General Charles S. Hamilton for refusal to obey Hamilton's order to report by telegraph to Brigadier General Isaac F. Quinby for orders concerning Quinby's wagon train. In a subsequent court-martial, Ross was found guilty and was sentenced to a reprimand from General Ulysses S. Grant. General Grant stated that Ross "was deserving of the serious reprimand" but that he "was not wilfully guilty of conduct so prejudicial to the service, but acted under the impulse of the moment, the belief that a wrong was being done to him."
Based on Ross' service record, Grant relieved him from his arrest and returned him to his command. Ross was placed in charge of the Yazoo Pass Expedition against the Confederate fortress of Fort Pemberton guarding Vicksburg from the north. Ross' expedition amounted to little more than an artillery duel against the fort before he decided to abandon the expedition. At the same time, reinforcements under General Quinby arrived, Quinby convinced Ross to renew the attack. Ross did so with few results and withdrew. Ross resigned his commission on July 22, 1863, in order to look after his personal interests, believing that the war was nearly over. A detailed description of Ross' service during the Civil War was published by the Iowa State Historical Society, Upon his return from the Mexican-American War, Ross was elected probate judge of Fulton County, a position which he held from 1847 to 1849, he was elected county clerk and served in this position for four years, during which time he was engaged in buying and selling land, raising stock, pursuing business interests.
Ross was a delegate to the Democratic National Conventions of 1852 and 1856, working on behalf of Stephen