📌 The Rational Expectations Hypothesis suggests that economic agents (such as consumers, producers, and investors) use all available information to make accurate forecasts about the future. According to this view, individuals learn from past experiences and economic models, and therefore, do not make systematic errors.
📌 New Classical Economics, which centers around this hypothesis, emerged in the 1970s as a critique of Keynesian policies. Advocated by influential economists such as Robert Lucas, Thomas Sargent, and Edward Prescott, this school emphasizes microeconomic foundations and questions the effectiveness of policy interventions, particularly in the short term.
New classical theorists argue that expansionary monetary policies can only influence the economy if they are unanticipated. Since rational agents adjust their behavior in anticipation of such policies, expected interventions are rendered ineffective.
🔍 This perspective underlines the importance of transparency and predictability in central bank policies, while supporting the idea that markets are capable of achieving equilibrium on their own without external interference.
