{"title":"On the limits of rational expectations for policy analysis","authors":"Martin Eichenbaum","doi":"10.1111/caje.12697","DOIUrl":null,"url":null,"abstract":"<p>In this lecture, I review work addressing three questions. First, are predictions about macro stabilization policies robust to reasonable departures from rational expectations? Second, do people's expectations converge to a particular set of rational expectations? Third, if they do converge, how quickly? I discuss examples from the literature where the answer to the first question is no. The answer to the second question is that learning equilibria converge to the “standard” rational equilibria analyzed in new Keynesian models. Finally, I discuss circumstances under which the answer to the third question is <i>very</i> slowly. In the examples, learning is slowest and policy analysis based on rational expectations is least robust in the face of shocks that render the stakes of getting policy “right” the highest.</p>","PeriodicalId":47941,"journal":{"name":"Canadian Journal of Economics-Revue Canadienne D Economique","volume":"56 4","pages":"1221-1237"},"PeriodicalIF":1.3000,"publicationDate":"2023-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/caje.12697","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Canadian Journal of Economics-Revue Canadienne D Economique","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/caje.12697","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
In this lecture, I review work addressing three questions. First, are predictions about macro stabilization policies robust to reasonable departures from rational expectations? Second, do people's expectations converge to a particular set of rational expectations? Third, if they do converge, how quickly? I discuss examples from the literature where the answer to the first question is no. The answer to the second question is that learning equilibria converge to the “standard” rational equilibria analyzed in new Keynesian models. Finally, I discuss circumstances under which the answer to the third question is very slowly. In the examples, learning is slowest and policy analysis based on rational expectations is least robust in the face of shocks that render the stakes of getting policy “right” the highest.
期刊介绍：
The Canadian Journal of Economics (CJE) is the journal of the Canadian Economics Association (CEA) and is the primary academic economics journal based in Canada. The editors seek to maintain and enhance the position of the CJE as a major, internationally recognized journal and are very receptive to high-quality papers on any economics topic from any source. In addition, the editors recognize the Journal"s role as an important outlet for high-quality empirical papers about the Canadian economy and about Canadian policy issues.
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号
