Rethinking Expectations

Rethinking Expectations

The Way Forward for Macroeconomics

eBook - 2013
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"This book originated from a 2010 conference marking the fortieth anniversary of the publication of the landmark "Phelps volume," Microeconomic Foundations of Employment and Inflation Theory, a book that is often credited with pioneering the currently dominant approach to macroeconomic analysis. However, in their provocative introductory essay, Roman Frydman and Edmund Phelps argue that the vast majority of macroeconomic and finance models developed over the last four decades derailed, rather than built on, the Phelps volume's "microfoundations" approach. Whereas the contributors to the 1970 volume recognized the fundamental importance of according market participants' expectations an autonomous role, contemporary models rely on the rational expectations hypothesis (REH), which rules out such a role by design. The financial crisis that began in 2007, preceded by a spectacular boom and bust in asset prices that REH models implied could never happen, has spurred a quest for fresh approaches to macroeconomic analysis. While the alternatives to REH presented in Rethinking Expectations differ from the approach taken in the original Phelps volume, they are notable for returning to its major theme: understanding aggregate outcomes requires according expectations an autonomous role."--Publisher's website.
Publisher: Princeton : Princeton University Press, ─é2013
ISBN: 9781400846450
1400846455
1283868369
9781283868365
0691155232
9780691155234
Characteristics: 1 online resource (vi, 432 pages) : illustrations
Additional Contributors: Phelps, Edmund S.
Frydman, Roman 1948-

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