The traditional tests for rationality have often rejected the hypothesis of rationality for survey data on expectations. It has been argued that, in the presence of unit roots, cointegration tests should be applied. The cointegration tests have often failed to reject the hypothesis of...

Conventional tests for rationality of survey data on expectations are not valid in the presence of measurement errors. However, if two or more survey measures of expectations are available on the true unobserved expectational variables, we can devise the appropriate FIML estimation methods and...