In the early 1970s,... economists began to embrace the Rational Expectations Hypothesis (REH), according to which market participants' expectations are essentially the same as the predictions of the relevant economic theory (Muth 1961: 316). What has been largely overlooked is that, … REH theorists presume that the role of market participants' expectations in driving outcomes is not autonomous from the other components of the model. … Because REH models, by design, rule out an autonomous role for expectations, they are best viewed as derailing, rather than developing, the microfoundations approach.


"Which Way Forward for Macroeconomics and Policy Analysis?" 2013

Roman Frydman Quotes

In the early 1970s,... economists began to embrace the Rational Expectations Hypothesis (REH), according to which market participants' expectations...

In the early 1970s,... economists began to embrace the Rational Expectations Hypothesis (REH), according to which market participants' expectations...

In the early 1970s,... economists began to embrace the Rational Expectations Hypothesis (REH), according to which market participants' expectations...

In the early 1970s,... economists began to embrace the Rational Expectations Hypothesis (REH), according to which market participants' expectations...