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| Author: | Misina, M. |
| Title: | Rationality of beliefs and model consistency |
| Journal: | Economics and philosophy
2008 : MAR, VOL. 24:1, p. 65-79 |
| Index terms: | rational expectations models |
| Language: | eng |
| Abstract: | In economic models, the assumption of rational expectations (RE) plays two roles: it imposes restrictions on behaviour of agents, and ensures model consistency (here as: cons-y). This paper introduces a conceptual framework within which the nature of the issue can be described. Potential problems are pointed out from the abandonment of RE. It is argued the RE-based notion of cons-y. being model-specific rather than general, introducing a weaker cons-y. condition relevant for non-RE models. In order to assess the cons-y. of the models, a test is proposed. It's use is illustrated based on an example from the recent literature. |
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