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Taking expectations seriously: A leitmotif in Stockholm School economics

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  • Hans-Michael Trautwein

Abstract

In the 1920s and 1930s, several Swedish economists whom Bertil Ohlin [1937] grouped under the label ?Stockholm School? explored dynamic methods for macroeconomic analysis. They developed concepts of sequence analysis and the twin notion of ex ante and ex post, which served to investigate the role of expectations in the coordination of incongruent plans in market systems. The starting point was Gunnar Myrdal?s dissertation on Price Formation and Change ( [1927], still untranslated), an attempt to show how the inclusion of expectations under imperfect foresight helps to transform static frameworks of general equilibrium analysis into dynamic theory. This led to an early discussion about ?rational expectations?, in which that notion was actually used by Erik Lundberg and elaborated as an endogenous outcome of Wicksell-style cumulative processes by Erik Lindahl. This paper presents and discusses these and further contributions to expectations theory (partly still untranslated) by Myrdal, Lindahl, Lundberg, Ohlin, Dag Hammarskjöld, Alf Johansson and Ingvar Svennilson. JEL codes: B25, D84, E30

Suggested Citation

  • Hans-Michael Trautwein, 2021. "Taking expectations seriously: A leitmotif in Stockholm School economics," Revue d'économie politique, Dalloz, vol. 131(3), pages 333-369.
    • Handle: RePEc:cai:repdal:redp_313_0015
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    Keywords

    Stockholm School; macroeconomics; dynamic theory; expectations;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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