Rational Expectations Theory and New Developments in Macroeconomics
The Rational Expectations Theory (RET) is a fundamental concept in modern macroeconomic thought, introduced by John Muth in the early 1960s and further developed by economists like Robert Lucas. This theory revolutionized macroeconomics by challenging the traditional assumptions about how individuals form their expectations regarding future economic variables, such as inflation, interest rates, and output. … Read more
