THE ROLE OF EXPECTATIONS IN DYNAMIC MACROECONOMIC MODELS: FROM ADAPTIVE TO RATIONAL EXPECTATIONS

Abstract

This article analyzes the evolution of approaches to forming expectations in dynamic macroeconomic models, from adaptive to rational ones. It examines the theoretical underpinnings of the adaptive expectations hypothesis, its limitations in a changing economic environment, and its inability to adequately incorporate new information. Particular attention is paid to the transition to the concept of rational expectations, based on the assumption that economic agents are fully informed and use all available information when forming forecasts. The paper analyzes the impact of various types of expectations on the dynamics of macroeconomic variables, such as inflation, output, and interest rates, as well as on the effectiveness of economic policy. It is shown that the introduction of rational expectations has significantly changed approaches to modeling macroeconomic processes and led to a reconsideration of the role of the state in stabilization policy. It is concluded that the choice of expectations model is a key factor in constructing adequate and prognostically accurate macroeconomic models.