Perfect Foresight, Expectational Consistency, and Macroeconomic Equilibrium
Abstract
This paper begins by introducing three alternative properties of expectations: weak
consistency, strong consistency, perfect foresight. These concepts are then used to
consider the relationship between beginnning of period equilibrium and end of period
equilibrium for both discrete and continuous time. We show that in the former case
the consistency between them requires not only that there be perfect foresight in
predicting certain relevant variables but also that there can be no accumulation of
assets. In the latter case the relationship between the two equilibria rests on much
weaker conditions. They are equivalent provided expectations satisfy our assumption
of weak consistency
Type
Journal articlePermalink
https://hdl.handle.net/10161/2110Collections
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Edwin Burmeister
Research Professor Emeritus of Economics

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