One of the most important developments in macroeconomics during the
last decade has been the introduction of the rational expectations
approach. Before the introduction of this method, economists relied
on a variety of ad hoc mechanisms which often led to errors in
their predictions. Studies in International Macroeconomics explains
the ways in which the rational expectations method deals with
uncertainty. It presents stochastic models and applies them to
curent issues such as exchange rate determination, the effects of
the rise and fall in oil prices, and the impact of wage indexing on
the economy.
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