The Fight Against Inflation: A Comment

Abstract

The development of rational expectations is one of the most important, and intellectually exciting, developments of economic theory in recent decades. Implications for economic theory, econometric theory and practice and for economic policy continue to flow, and it is both safe — and rational — to expect that we are nearer to the beginning than to the end of these developments.

I am indebted to my colleagues Scott Richard and Dan Peled for helpful discussions of the properties of the intergenerational model.