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On The (In)Consistency of Re Modeling

Author

Listed:
  • Daniel Heymann

    (Instituto Interdisciplinario de Economía Política de Buenos Aires - UBA - CONICET)

  • Paulo Daniel Pascuini

    (Instituto Interdisciplinario de Economía Política de Buenos Aires - UBA - CONICET)

Abstract

Rational Expectations (RE) is typically interpreted as: (i) an equivalence between the probability distribution of future outcomes informing agents´ decisions and the objective distributions; or: (ii) a correspondence between the expectations of agents and those generated by professionally validated models. Both definitions differ, unless absolute validity is counterfactually attributed fallible models built by economists. Another ambiguity arises with the model-consistency notion, since what is considered relevant theory has varied over time and across researchers, especially in Macroeconomics. These issues affect the logic and significance of analytical procedures for treating expectations, and seem particularly pertinent when studying crises.

Suggested Citation

  • Daniel Heymann & Paulo Daniel Pascuini, 2018. "On The (In)Consistency of Re Modeling," Documentos de trabajo del Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET) 2018-28, Universidad de Buenos Aires, Facultad de Ciencias Económicas, Instituto Interdisciplinario de Economía Política IIEP (UBA-CONICET).
    • Handle: RePEc:ake:iiepdt:201828
    as

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    References listed on IDEAS

    as
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    4. Joseph E. Stiglitz & Daniel Heymann (ed.), 2014. "Life After Debt," International Economic Association Series, Palgrave Macmillan, number 978-1-137-41148-8, December.
    5. George William Evans, 2001. "Expectations in Macroeconomics Adaptive versus Eductive Learning," Revue économique, Presses de Sciences-Po, vol. 52(3), pages 573-582.
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    More about this item

    Keywords

    Macroeconomics; Rational Expectations; Model Consistency;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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