Rational Expectations and Inflation
Book description
This collection of essays written by one of the founders and chief proponents of rational expectations theory is intended as a supplement for macroeconomics courses. Thomas Sargent applies rational expectations macroeconomics at an informal, non-econometric level to interpret a variety of historical and contemporary issues. Sargent uses inflation as a…
Why read it?
1 author picked Rational Expectations and Inflation as one of their favorite books. Why do they recommend it?
Sargent shows how the monetary excesses leading to inflation have often been connected to using money to cover government budgetary shortfalls. This is vividly illustrated in chapter 3 by the way that ending the post-World War I hyperinflations required fundamental fiscal as well as monetary reform.
Sargent also convincingly demonstrates the power of expectations and the idea that, as government behavior changes, people’s behavior adjusts as well.
You really cannot argue with the Ancient Chinese proverb included on the first page: “The government has strategies. The people have counterstrategies.” Amidst the rich trove of historical cases, my favorite remains chapter…
From Richard's list on if you didn’t think money matters.
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