Rational expectations
By: Steven M. Sheffrin.
Edition: 2nd ed.
Series: Cambridge surveys of economic literature
Publisher: Cambridge University Press
Published: 1996
Place of publication: Cambridge; New York
Language: eng
Number of pages: 184
Subjects: Rational expectations (Economic theory); Macroeconomics.; Microeconomics.
Description: Economists have recently been working with models in which individuals form expectations of key variables in a "rational" manner, such that these expectations are consistent with actual economic environments. Professor Sheffrin first explores the logical foundation of the concept and the case for employing it in economic analysis. Subsequent chapters investigate its use in macroeconomics, financial markets, and microeconomics.

A final chapter assesses its impact on theoretical and empirical work in economics and policy arenas. The author argues that although expectations are still central to macroeconomic policy debates, fully workable models have not yet been devised, and he offers reasons for the lack of conceptual and practical advances. All chapters of the second edition have been revised or expanded.

New sections include, inter alia, material on learning, the rationality of reported expectations, alternative recent developments that explicitly or implicitly use rational expectations, new tests of the Lucas critique, and models of noise trading.
Notes: Includes bibliographical references (p. 169-179) and index.