BPEA | 1976 No. 2

Rational Expectations in the Macro Model

William Poole Martin Neil Baily and Edmund S. Phelps
Edmund S. Phelps Columbia University

1976, No. 2

THE ANTICIPATIONS of households and firms played a central role in Keynes’ General Theory, and in the thinking of every macrotheorist since. My purpose in this paper is to examine the major new issues about anticipations raised by the recent explosion of theoretical and empirical work based on the theory of rational expectations