Geri Anasayfa

Detay


THE EFFECT OF RATIONAL EXPECTATIONS TO PRICE MAKING IN NEOCLASSICAL ECONOMICS

Abstract
The subject of this study is rational expectations, which was put forward by J. Muth in the 1960s and which was used by the representations of Neoclassical point of view in the 1970s, and the effect of rational expectations to price making. The neoclassical point of view, which has been pioneered by Robert E. Lucas from Chicago University, is based on two important hypothesis, one of which is the hypothesis of rational adaptations. According to this, decision units in economy reach decision about prices by having all information, including government politics and its effects. Therefore, rational expectation is an effect in the making of price. The second hypothesis of neoclassical point of view is all prices, including wages in economy, are complete flexible. The idea which thinks that expectations make as adaptive contraries to optimization principle, which is one of important hypothesis of micro economic analyses, because it gives a place to systematic errors. Therefore, expectations should be modeled with a way which does not conflict with rational hypothesis, the model of which firstly was put forward by J. Muth (1961) with "Rational Expectations Hypothesis". According to hypothesis, economic actors optimally use taken all knowledge about economic variables. From this perspective rational expectations are taken knowledge of rational behaviour principle, processing this knowledge and applying it to the process of making of expectations.

Keywords
Expectation, Rational, Rational Expectations, Muth, Price Making