Re: RATIONAL EXPECTATIONS

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

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1. Regime change. Yes you do quote Sargent 1993 on regime change. My oversight. The point I was trying to make was not with regard to bounded rationality but to an earlier Sargent (1984) piece where he says:

"for a single economy it is impossible to conceive of a rational expectations model in which there can occur a regime change. On this interpretation, what we have interpreted as changes in regime were really only the realization of events and human responses under a single more complicated regime."

This I think is another angle to regimes changes. Even if changes are excactly foreseen, the concept of regime change is not well defined and is not tractable. And it leads to contradictions (proclaiming regime changes for a single economy).

2. You write:
But I also make this point in several articles in the 1980s JPKE including
"Reviving Keynes's Revolution" and "Rational Expectations: A fallacious
Foundation...."
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I was only providing a couple of examples.That is all.

You write:
Accordingly, Schumpeterian innovation is not logically consistent with
rational expectations mo0dels -- a mch more important point than worrying
about capital accumulation under KIeyn es's STATIC MODEL conditions-- which by
the wat Keynes does deal with in chapter 17 of the GT.
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I was asking a question of consistency in Keynes thought. I did not get an answer.

You [davidson] write:
No. If one wants to discuss fiction -- but not if one wants to understand the
role of MONEY AND THE REAL WORLD!!
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Theories such as monetarism, or New Ky economics or Rational Expectations + market clearing may be built as you say on fiction but their policy prescriptions and implementation and their effects on growth and distribution of income are real. I can't ignore that.

Esteban Perez