Rational expectations is a basic economic theory that originated with a paper written in 1972 by future Nobel Prize-winning economist Robert Lucas. The theory of rational expectations has been ...

Why So Grim About Iran? A Strait-Up Debacle Electric Vehicles: Charging Woes (Still) Audio By Carbonatix Writing about the recently departed Robert Lucas, John Cochrane gives a nice clear explanation ...

Market bubbles are like whispers at a party that turn into deafening laughter – one starts, and everyone piles in, usually because they think it’s the right thing to do. But why does this happen, and ...

This paper examines the robustness characteristics of optimal control policies derived under the assumption of rational expectations to alternative models of expectations. We assume that agents have ...

Consumer demand is a driving force of economic growth, accounting for about two-thirds of the US economy. So when policymakers want to determine how a particular fiscal or monetary policy will land, ...

This paper studies how and why inflation expectations have changed since the emergence of Covid-19. Using micro-level data from the University of Michigan Survey of Consumers, we show that the ...