Varieties of Rational Expectations: Their Differences and Relations

The incorporation of Muth's (1961) rational expectations hypothesis into macroeconomics constitutes one of the major developments in the recent history of our profession. Though Hahn's conjecture that this development will soon appear to have been no more than a little local disturbance (Hahn, 1983) may well prove to be right, the current literature provides little indication that this will be the result of current research. Modern controversy is concerned with the kind of economic performance rational expectations can explain, rather than being concerned with the acceptability of the rational expectations hypothesis as such. Those who still attempt to raise doubts about the hypothesis fail to receive much attention or to initiate further debates. This state of affairs may, at least in part, be explained by the ambigu