This paper studies, within a simple "ad hoc" macroeconomic model not derived from individuals' and firms' optimizing behavior but built to resemble the macroeconometric models of the time, how the …
This 1978 Econometrica paper by Robert E. Lucas, Jr. builds a theoretical model of a one-good, pure-exchange economy with identical consumers and a fixed number of stochastically productive units, in …
PublishedJournal of Monetary EconomicsOnline 1 Apr 2026Published Apr 2026
The paper asks two questions: (1) How do workers' biased expectations about job finding and job separation shape the labor market equilibrium and wages? (2) Are differences in expectation biases …
Online FirstReview of Economic StudiesOnline 19 Mar 2026
This paper examines whether heterogeneity in individual gain-loss attitudes — the degree to which people weigh losses more or less severely than equivalent gains — contaminates prior tests of …
PublishedClassicCarnegie-Rochester Conference Series on Public PolicyPublished Jan 1976
This 1976 Carnegie-Rochester Conference Series paper by Robert Lucas argues that the standard "theory of economic policy" -- simulating a fixed, estimated econometric model under alternative …
Online FirstReview of Economic StudiesOnline 21 May 2026
Multiple prior decision models—in which beliefs are represented by a set of probability measures rather than a single measure, generating a probability interval for each event—have become increasingly …
PublishedQuarterly Journal of EconomicsOnline 13 Jan 2026Published Apr 2026
This paper investigates whether individuals who have experienced stronger GDP growth over their lifetimes are more likely to trust their national government. The authors — Besley, Dann, and Dray — …
Online FirstQuarterly Journal of EconomicsOnline 25 Jul 2026
Using tailored surveys of more than 11,000 US and German households, retail investors, financial professionals, and academic experts, the paper documents the "mental models" people use when reasoning …
Online FirstJournal of Money, Credit and BankingOnline 23 Oct 2025
Analyzing panel data from the U.S. Survey of Professional Forecasters (SPF, 1992Q1–2019Q4, 77 forecasters, 1,520 forecaster-quarter observations), Julio Ortiz finds that a "misspecified expectations" …
Online FirstReview of Economic StudiesOnline 18 Feb 2026
This paper investigates two related empirical questions in the context of the historic surge in US inflation in late 2021 and 2022: (1) What narratives—causal stories—do people invoke to explain why …
This paper builds a dynamic, non-stochastic model of the "optimal" fiscal control of aggregate demand, deriving the time path of aggregate employment (or "utilization") that a policymaker who cares …
PublishedJournal of Monetary EconomicsPublished Mar 2026
This paper asks whether Survey of Professional Forecasters (SPF) data can be efficiently integrated into medium-scale DSGE models, and whether models with imperfectly rational expectations based on …
This 1961 Econometrica paper by John Muth proposes that economic expectations should be modeled as essentially the same as the predictions of the relevant economic theory itself -- so that, for a …
This 1977 Journal of Political Economy paper by Finn Kydland and Edward Prescott argues that optimal control theory -- the standard technique proposed for macroeconomic stabilization policy -- is not …
This 1983 Journal of Monetary Economics paper by Robert Barro and David Gordon shows that a monetary authority acting with full discretion each period will generate more inflation on average than one …
Online FirstJournal of Political EconomyOnline 31 Aug 2026
Survey forecasts depart from rational expectations in ways that look contradictory: consensus forecasts under-react to news, individual forecasts of macroeconomic variables tend to over-react, and …
PublishedClassicThe Economic JournalOnline 14 Nov 2025Published May 2026
This essay argues that rational expectations about equilibrium prices -- which in heterogeneous-agent models means forecasting prices by forecasting the entire cross-sectional distribution, via an …