The rational expectations revolution: an assessment
Article Abstract:
Macroeconomics did not rely much on mathematics in the 1930s, but after the 1940s Richard Stone and Jan Timbergen introduced quantitative macroeconomics. John Maynard Keynes was suspicious of Timbergen's endeavors to construct a closed empirical structuring of the economy, but the model gained prominence, and economists began to analyze macroeconomic relations. The end of the 1950s witnessed serious research on expectations theory by Herbert Simon and John Muth. Muth employed the rational expectations theory introduced by Robert Lucas in his analysis. Lucas was responsible for solving the implications of Muth's rational expectations theory for the Phillips Curve and the labor markets.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1992
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The limits of macroeconomics
Article Abstract:
Market forces, which are the result of both microeconomic and macroeconomic phenomena, limit the dimensions of macroeconomics, and the pre-Keynesian approach to capital theories facilitates a better understanding of this complexity. Macroeconomists ignore the time element in theorizing which proves that macroeconomics cannot adequately deal with the capital theory. Macroeconomics does not deal with policy activism, institutional reforms, theoretical advancement and entrepreneurial predictions.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1992
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Rational expectations and the new classical macroeconomics
Article Abstract:
Major changes in the content of microeconomics and monetary theory have erased the distinction between macroeconomics and microeconomics, but this new economic theory has been restricted to academic environs. Macroeconomic and monetary policies of government policy-making departments have remained untouched by this new school of thought. Keynesian economics has been declared defunct and the new macroeconomic theories are based on the elements of microeconomics.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1992
User Contributions:
Comment about this article or add new information about this topic:
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