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Rational Expectations in Economic Theory

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  • Vîntu, Denis

Abstract

This paper examines the rational expectations hypothesis, a central concept in modern macroeconomics. It explores the theoretical foundations, methodological implications, applications in macroeconomic models, empirical evidence, criticisms, and relevance for contemporary policy analysis. The analysis highlights both the strengths and limitations of rational expectations, situating it as a benchmark assumption that continues to shape modern economic thought.

Suggested Citation

  • Vîntu, Denis, 2025. "Rational Expectations in Economic Theory," MPRA Paper 125823, University Library of Munich, Germany, revised Aug 2025.
    • Handle: RePEc:pra:mprapa:125823
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    File URL: https://mpra.ub.uni-muenchen.de/125823/1/MPRA_paper_125823.pdf
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    References listed on IDEAS

    as
    1. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    2. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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