Development of rational expectations models of the business cycle has been the central issue in macroeconomics over the last 15 years. The postulate that expectations are rational imposes considerable discipline on business cycle analysis. In this essay we review the current literature on rational expectations models of business cycles with specific attention focused on the extent to which the rational expectations perspective has generated a new understanding of economic fluctuations.
Our Research Focus: Economic Growth and Business Cycles
Amanda L. Kramer