Rational expectations is a basic economic theory that originated with a paper written in 1972 by future Nobel Prize-winning economist Robert Lucas. The theory of rational expectations has been ...

Market bubbles are like whispers at a party that turn into deafening laughter – one starts, and everyone piles in, usually because they think it’s the right thing to do. But why does this happen, and ...

Green, Jerry R., and Seppo Honkapohja. "Variance-Minimizing Monetary Policies with Lagged Price Adjustment and Rational Expectations." European Economic Review 20, nos. 1-3 (January 1983): 123–141.

This paper examines the robustness characteristics of optimal control policies derived under the assumption of rational expectations to alternative models of expectations. We assume that agents have ...

This paper studies how and why inflation expectations have changed since the emergence of Covid-19. Using micro-level data from the University of Michigan Survey of Consumers, we show that the ...

Our eLibrary offers over 25,000 IMF publications in multiple formats. This paper estimates a standard Dynamic Stochastic General Equilibrium (DSGE) model that includes a wage and price Phillip's ...