rational expectations theory

Rational expectations theory assumes a set of economic agents with beliefs about how the economy is working.

Rational expectations theory is built up around another fixed-point theorem.

He was highly critical of rational expectations theory, and devoted his work to development and human rights.

The primary reason for this appears to be his attack on the rational expectations theories that continue to dominate the discipline.

And in a telephone interview after winning the Nobel prize he was quick to share the credit for rational expectations theory with others.

Some economists now use the adaptive expectations model, but then complement it with ideas based on the rational expectations theory.

The book is part of an ongoing argument between supporters of rational expectations theories and analysts who look for alternative explanations.

The rational expectations theory said that expectations of inflation were equal to what actually happened, with some minor and temporary errors.

Rational expectations theory is the basis for the efficient market hypothesis (efficient market theory).

Nor are modern economists, raised on a limited diet of rational expectations theory and unbiased estimators, inclined to examine the big picture.

Rational expectations theories were developed in response to perceived flaws in theories based on adaptive expectations.

Rational Expectations Theory (economics)

Rational expectations theory defines this kind of expectations as being identical to the best guess of the future (the optimal forecast) that uses all available information.

In his book Essence of Decision, political scientist Graham T. Allison specifically attacked the rational expectations theory.

When he first wrote the book, Allison contended that political science and the study of international relations were saturated with rational expectations theories inherited from the field of economics.

A core assertion of rational expectations theory is that actors will seek to "head off" central-bank decisions by acting in ways that fulfill predictions of higher inflation.

However, rational expectations theory has been widely adopted throughout modern macroeconomics as a modelling assumption thanks to the work of New Keynesians such as Stanley Fischer.

Rational expectations theory holds that economic actors look rationally into the future when trying to maximize their well-being, and do not respond solely to immediate opportunity costs and pressures.

He criticizes monetarism, rational expectations theory, and conservative economists' views on taxes and regulation, arguing for greater government intervention into the market-economy via increased deficit spending and higher taxes.

With the rise of rational expectations theory, the idea that financial markets and entire economies can spiral into bad outcomes-and for no very good reason-was relegated to a mathematical curiosity: so called "sunspots."

"Shackle and Keynes vs. Rational Expectations Theory on the Role of Time, Liquidity, and Financial Markets" 1990, in S. Frowen (ed.)

Attfield and Duck (1982) found that they could reject the rational expectations theory of the term structure of interest rates when they applied the above model to three-monthly, five-yearly and ten-yearly rates of interest in the UK.