Rational Expectations and Inflation (3rd edn)
Rational Expectations and Inflation (3rd edn)
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Abstract
This collection of essays uses the lens of rational expectations theory to examine how governments anticipate and plan for inflation, and provides insight into the pioneering research for which the author was awarded the 2011 Nobel Prize in economics. Rational expectations theory is based on the simple premise that people will use all the information available to them in making economic decisions, yet applying the theory to macroeconomics and econometrics is technically demanding. This book engages with practical problems in economics in a less formal, noneconometric way, demonstrating how rational expectations can satisfactorily interpret a range of historical and contemporary events. It focuses on periods of actual or threatened depreciation in the value of a nation's currency. Drawing on historical attempts to counter inflation, from the French Revolution and the aftermath of World War I to the economic policies of Margaret Thatcher and Ronald Reagan, the book finds that there is no purely monetary cure for inflation; rather, monetary and fiscal policies must be coordinated. This fully expanded edition includes the author's 2011 Nobel lecture, “United States Then, Europe Now.” It also features new articles on the macroeconomics of the French Revolution and government budget deficits.
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Front Matter
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1
Rational Expectations and the Reconstruction of Macroeconomics
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2
Reaganomics and Credibility
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3
The Ends of Four Big Inflations
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4
Stopping Moderate Inflations: The Methods of Poincaré and Thatcher
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5
Some Unpleasant Monetarist Arithmetic
Neil Wallace
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6
Interpreting the Reagan Deficits
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7
Speculations about the Speculation against the Hong Kong Dollar
David T. Beers andNeil Wallace
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8
Six Essays in Persuasion
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9
Macroeconomic Features of the French Revolution
François R. Velde
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10
United States Then, Europe Now
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End Matter
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