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The Correct Economic Interpretation of Rational Expectations

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Gersbach, H. The Correct Economic Interpretation of Rational Expectations. . Reply. Credit and Capital Markets – Kredit und Kapital, 28(2), 221-226. https://doi.org/10.3790/ccm.28.2.221
Gersbach, Hans "The Correct Economic Interpretation of Rational Expectations. Reply. " Credit and Capital Markets – Kredit und Kapital 28.2, 1995, 221-226. https://doi.org/10.3790/ccm.28.2.221
Gersbach, Hans (1995): The Correct Economic Interpretation of Rational Expectations, in: Credit and Capital Markets – Kredit und Kapital, vol. 28, iss. 2, 221-226, [online] https://doi.org/10.3790/ccm.28.2.221

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The Correct Economic Interpretation of Rational Expectations

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Gersbach, Hans

Credit and Capital Markets – Kredit und Kapital, Vol. 28 (1995), Iss. 2 : pp. 221–226

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Hans Gersbach, Basel

References

  1. Azariadis, C. (1993) Intertemporal Macroeconomics, Blackwell, Massachusetts.  Google Scholar
  2. Bernholz, P. and Gersbach, H. (1992) The Present Monetary Theory of Advance Inflation: A Failure? The Journal of Institutional and Theoretical Economics, 148, 705 - 719.  Google Scholar
  3. Buiter, W. (1990) Principles of Budgetary and Financial Policy, Harvester Wheatsheaf, New York and London.  Google Scholar

Abstract

In a comment on my article, Wesche and Wierum criticize the derived relationship between money growth and inflation during accelerating inflation for a model with exponential money demand. However, their analysis has several flaws and the authors seem not to be aware of the economic content of rational expectations equilibria. A correct calculation and interpretation of their exercise fully supports the conclusions in my earlier paper.