Rajiv Sethi — On Equilibrium, Disequilibrium, and Rational Expectations

Interesting post on a current debate on REH and DSGE on the blogs, if you are interested in this. Looks to me like after the dust settles, the concepts of rational expectations and equilibrium are going to get a lot looser than they were going in, at least for some people. Simple models based on narrow assumptions are no longer considered tenable. Professor Sethi explains why and what the new direction needs to be.

Read it at Rajiv Sethi | thoughts on economics, finance, crime and identity...

On Equilibrium, Disequilibrium, and Rational Expectations

by Rajiv Sethi | Professor, Barnard College, Columbia University & External Professor, Santa Fe Institute