by hisbabiigirl20 January 24, 2008
Get the rational mug.*noun*; a method of representing the economy as the sum of many identical individuals and firms, each represented by a system of mathematical equations. The Rational Expectations Hypothesis (REH) takes its name from the premise that economic actors, i.e., everyone, do not make consistent errors about the present or future behavior of markets.
REH was devised mainly as a rebuke to Keynesian economics, and in particular, the strategy of fiscal policy or monetary policy.
According to the REH, fiscal policy does not alter aggregate demand because the "average" person recognizes that her lifetime income is not increasing--so she needs to save rather than spend the stimulus money, in anticipation of higher taxes in the future.
At the same time, monetary policy does not work because it relies on lowering interest rates to make more money available; more money means inflation, but people have to be deceived into thinking prices for their product are going up, so they will expand production. According to REH, people or firms will figure this out, and see increased demand as mere inflation. Instead of increasing output and employment, they'll want to raise prices so they can meet their future bills.
According to REH, both monetary and fiscal policy rely on illusions to work; and since people (on average) will make rational estimates o the future, they will defeat these illusions.
REH was devised mainly as a rebuke to Keynesian economics, and in particular, the strategy of fiscal policy or monetary policy.
According to the REH, fiscal policy does not alter aggregate demand because the "average" person recognizes that her lifetime income is not increasing--so she needs to save rather than spend the stimulus money, in anticipation of higher taxes in the future.
At the same time, monetary policy does not work because it relies on lowering interest rates to make more money available; more money means inflation, but people have to be deceived into thinking prices for their product are going up, so they will expand production. According to REH, people or firms will figure this out, and see increased demand as mere inflation. Instead of increasing output and employment, they'll want to raise prices so they can meet their future bills.
According to REH, both monetary and fiscal policy rely on illusions to work; and since people (on average) will make rational estimates o the future, they will defeat these illusions.
The rational expectations hypothesis states that we can break the realization of a return into an expected return that depends on the current information set and an unexpected component that depends only on new information.
by Abu Yahya March 3, 2009
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Ratiolore (Kyle) is a famous twitter micro celebrity who used to go by the name "Dakarai Moonshade" after that was "LThePerson" and after that "Lillixy" before his transition. after he was named "Ky_snoop99" then "Kyle 6969" then Ratiolore (he thought it was cool)
Delta:hey have you ever heard of ratiolore
Beta:no who is he?
Delta: hes my friend and hes cool
Beta: oh ok
Beta:no who is he?
Delta: hes my friend and hes cool
Beta: oh ok
by Kyle (Ratiolore) March 24, 2022
Get the Ratiolore mug.to make excuses by masking own flaws/insecurities by explaining one's own reasoning/actions, often used to avoid the real reason or reality when all it does it make one small, simple & scared.
Joe: Bill why did you beat that guy up?
Bill: cuz he flirted with my girlfriend dude.
Joe: Umm, he was just asking where a store is.
Bill: Well, I had to protect her honor & defend her, besides he looked shifty.
Joe: You're just doing nothing but rationalize.
Bill: cuz he flirted with my girlfriend dude.
Joe: Umm, he was just asking where a store is.
Bill: Well, I had to protect her honor & defend her, besides he looked shifty.
Joe: You're just doing nothing but rationalize.
by fballjones October 12, 2010
Get the rationalize mug.Scientist 1: Look! I've discovered a new type of cancer!
Scientist 2: That's just rationalwiki
Scientist 1: What's the difference?
Scientist 2: That's just rationalwiki
Scientist 1: What's the difference?
by AcidSpittingLlama January 2, 2018
Get the Rationalwiki mug.Person 1:Have you heard of RationalWiki?
Person 2:No
Person 1:They keep spreading SJW propaganda with no factual backing
Person 2:You mean tumblr made a wiki?
Person 2:No
Person 1:They keep spreading SJW propaganda with no factual backing
Person 2:You mean tumblr made a wiki?
by AntBlaze July 2, 2018
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The ability to reason. A quality lacking in most. A good rule of thumb is, those who claim to be rational are the least rational. Virtually non-existant in political circles worldwide. While not important to happiness, the world needs rational people to function. No one knows why.
The ability to reason. A quality lacking in most. A good rule of thumb is, those who claim to be rational are the least rational. Virtually non-existant in political circles worldwide. While not important to happiness, the world needs rational people to function. No one knows why.
by Moses June 16, 2004
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