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Published in:
2019 | OriginalPaper | Chapter
Mark Thoma Recommends “Learning and Expectations in Macroeconomics” by George Evans and Seppo Honkapohja
Author : Mark Thoma
Published in: 21st Century Economics
Publisher: Springer International Publishing
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Abstract
Is it reasonable to assume expectations are formed rationally? In order to form rational expectations, people must know all of the equations describing the economy as well as the statistical properties of the shocks. In addition, they must use this knowledge to produce the best possible forecasts of how the economy will evolve over time. But how do people obtain the required information? Is it possible to use standard econometric methods to learn enough about the economy to produce rational expectations?