“An alternative “rational expectations” view denies that there is any inherent momentum in the present process of inflation. This view maintains that firms and workers have now come to expect high rates of inflation in the future and that they strike inflationary bargains in light of these expectations.”

Thomas J. Sargent, "The Ends of Four Big Inflations" (1981).

Adopted from Wikiquote. Last update Oct. 3, 2023. History

Help us to complete the source, original and additional information

Do you have more details about the quote "An alternative “rational expectations” view denies that there is any inherent momentum in the present process of inflat…" by Thomas J. Sargent?

Thomas J. Sargent10

American economist 1943

Related quotes

“Cagan’s adaptive mechanism for explaining expectations of inflation has sometimes been criticized as an ad hoc formulation that is inconsistent with the hypothesis that expectations are rational. In this paper, we have showed that conditions exist under which adaptive expectations are fully rational.”

Thomas J. Sargent (1943) American economist

"Rational expectations and the dynamics of hyperinflation." 1973

“The theory of economic shock therapy relies in part on the roleof expectations on feeding an inflationary process. Reining in inflation requires not only changing monetary policy but also changing the behavior of consumers, employers and workers. The role of a sudden, jarring policy shift is that it quickly alters expectations, signaling to the public that the rules of the game have changed dramatically - prices will not keep rising, nor will wages.”

Naomi Klein (1970) Canadian author and activist

The Shock Doctrine: The Rise of Disaster Capitalism (2007)

“Let there be no doubt that our present rate of inflation is the main cause of our economic difficulties. There never has been a more mistaken piece of economic analysis than the view that we should accept inflation to avoid unemployment. Inflation today, so far from being an alternative to unemployment, is its main cause. If our rate of cost increase is allowed to continue close to twice that of the average for the developed world it will increasingly price us out of world markets. Employers…will have to restrict their activities and still more their labour force in response to mounting and uncontainable wage and salary bills.”

Roy Jenkins (1920–2003) British politician, historian and writer

Hugh Anderson Memorial lecture at the Cambridge Union (28 February 1975), quoted in The Times (1 March 1975), p. 2
1970s

“In my view all salvation for philosophy may be expected to come from Darwin's theory”

Ludwig Boltzmann (1844–1906) Austrian physicist

"Theoretical Physics and Philosophical Problems, Selected Writings", Ludwig Boltzmann, ed. B. McGuinness, 1974, p. 193

“One interesting footnote: although Friedman made great strides in macroeconomics by applying the concept of individual rationality, he also knew where to stop. In the 1970s, some economists pushed Friedman’s analysis of inflation even further, arguing that there is no usable trade-off between inflation and unemployment even in the short run, because people will anticipate government actions and build that anticipation, as well as past experience, into their price-setting and wage-bargaining. This doctrine, known as “rational expectations,” swept through much of academic economics. But Friedman never went there.”

Paul Krugman (1953) American economist

"Who Was Milton Friedman?", The New York Review of Books (February 15, 2007)
The New York Review of Books articles

“Global rationality, the rationality of neoclassical theory, assumes that the decision maker has a comprehensive, consistent utility function, knows all the alternatives that are available for choice, can compute the expected value of utility associated with each alternative, and chooses the alternative that maximizes expected utility. Bounded rationality, a rationality that is consistent with our knowledge of actual human choice behavior, assumes that the decision maker must search for alternatives, has egregiously incomplete and inaccurate knowledge about the consequences of actions, and chooses actions that are expected to be satisfactory”

Herbert A. Simon (1916–2001) American political scientist, economist, sociologist, and psychologist

attain targets while satisfying constraints
Simon (1997, p. 17); As cited in: Gustavo Barros (2010, p. 460).
1980s and later

“To expect too much is to have a sentimental view of life and this is a softness that ends in bitterness.”

Flannery O’Connor (1925–1964) American novelist, short story writer

“The leadership and other processes of the organization must be such as to ensure a maximum probability that in all interactions and all interactions and all relationships with the organization each member will, in the light of his background, values, and expectations, view the experience as supportive and one which builds and maintains his sense of personal worth and importance.”

Rensis Likert (1903–1981) American statistician

Source: New patterns of management, (1961), p. 103

“If you have come with high expectations of anything, you have come to the wrong place.”

R. A. Lafferty (1914–2002) American writer

A lieutenant of Tiresias, Ch. 7
Space Chantey (1968)

“In most Western economies, the general relationship is not in fact between the rate of inflation and the level of unemployment, but between the rate of change of inflation and the rate of change of unemployment.”

Paul Ormerod book The Death of Economics

Part II, Chapter 6, Unemployment and Inflation, p. 130
The Death of Economics (1994)

Help us to complete the source, original and additional information

Thomas J. Sargent10

Related quotes

Related topics