Before revision:  These values may be completely unconstrained by the requirement of model-consistency  , yet when  appropriately specified, they determine a unique solution . This finding demonstrates the necessity of complementing rational expectations with modelsof the most immediate forecast revisions that result from economic shocks .
After revision:  These values may be completely unconstrained by the requirement of model-consistency , yet when appropriately specified, they determine a unique solution is determined. In a broad class of models, the requirement of least-square forecast errors determines the parameter values, and therefore defines a unique solution. This approach is independent of dynamical stability, and generally does not suppress model dynamics. Application to a standard New Keynesian example shows that the traditional solution suppresses precisely those dynamics that arise from rational expectations. The uncovering of those dynamics reveals their incompatibility with the new I-S equation and the expectational Phillips curve .