The hypothesis that an economic agent will make full use of all available information when forming expectations, especially with regard to inflation, and not just past values of a particular variable. Compare with adaptive expectations hypothesis.
More example sentences
- Pity about the rational expectations hypothesis, eh.
- Rational expectations theory has emerged as an important aspect of new classical economics.
- In the context of the bond market, empirical tests of the rational expectations hypothesis (REH) have without exception been tests of the time-series properties of interest rates.
Definition of rational expectations hypothesis in:
- The British & World English dictionary