Rational Expectations | Economics Discussion

Theory of Rational Expectation | Theories| Macroeconomics

The new classical macroeconomics is based on the rational expectations hypothesis. This means that people have rational expectations about economic variables. The implication is that people make intelligent use of available information in forecasting variables that affect their economic decisions. According to this hypothesis, forecasts are unbiased and based on all available information. The hypothesis holds that people make unbiased [...]

By Anushree A|2017-03-04T14:07:50+05:30March 4, 2017|Rational Expectations|Comments Off

Rational Expectations : Meaning, Nature and Everything Else

Read this article to learn about the meaning, nature, definitions and origin of concept of rational expectations in economic theory. Meaning: Rational Expectation is the focal point of the modern debate in Economic Theory. It is a surprisingly simple concept but its implications are radical and profound. The rational expectations revolution highlighted some of the shortcomings of the orthodox 'Keynesian [...]

By M. Agarwal|2015-08-10T10:58:23+05:30August 4, 2015|Rational Expectations|Comments Off

7 Major Implications and Challenges of Rational Expectations

Read this article to learn about the seven major implications and challenges of rational expectations. (i) Validity of Impotency Result: The most important implication of the rational expectations model on economics during the last decade or so has been that aggregate demand management designed to lower unemployment will always be ineffective. The advocate of 'Ratex' argue that such a policy [...]

By M. Agarwal|2015-08-10T10:58:33+05:30August 4, 2015|Challenges|Comments Off

Archive | Rational Expectations

Theory of Rational Expectation | Theories| Macroeconomics

Rational Expectations : Meaning, Nature and Everything Else

7 Major Implications and Challenges of Rational Expectations