Complex sentence: When applying rational expectations within a macroeconomic framework, Sargent and Wallace produced the policy ineffectiveness proposition, according to which the government could not intervene in the economy to manipulate output.
Split into simpler sentences: When applying rational expectations within a macroeconomic framework Sargent and Wallace produced the policy ineffectiveness proposition. According to the proposition the government would not be able to intervene in the economy to manipulate output.