optimally rational expectations and macroeconomics

Learning, Rationality, the Stability of Equilibrium and Macroeconomics

Equilibrium and Macroeconomics. The issue of how agents learn to form rational expectations has received increasing attention lately. The approach taken in many papers treats model stability as a problem in learning. In reviewing this literature, the author examines carefully the assumptions about individual behavior required for learning to form rational expectations. The meaning of rationalit...

SERIE RESEARCH mEmORMIDII RATIONAL EXPECTATIONS AND NEW CLASSICAL MACROECONOMICS

Comparing behavioural and rational expectations for the US post-war economy

The banking crisis has caused a resurgence of interest in behavioural models of expectations in macroeconomics. Here we evaluate behavioural and rational expectations econometrically in a New Keynesian framework, using US post-war data and the method of indirect inference. We …nd that after full reestimation the model with behavioural expectations is strongly rejected by the data, whereas the s...

Rational Expectations and Inflation Third Edition

this collection of essays uses the lens of rational expectations theory to examine how governments anticipate and plan for inflation, and provides insight into the pioneering research for which thomas sargent was awarded the 2011 nobel prize in economics. rational expectations theory is based on the simple premise that people will use all the information available to them in making economic dec...

Finite Horizon Learning

Incorporating adaptive learning into macroeconomics requires assumptions about how agents incorporate their forecasts into their decision-making. We develop a theory of bounded rationality that we call finite-horizon learning. This approach generalizes the two existing benchmarks in the literature: Eulerequation learning, which assumes that consumption decisions are made to satisfy the one-step...