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Are Perceptions Of Inflation Rational? Some Evidence For Sweden

Author

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  • JONUNG, LARS
  • LAIDLER, DAVID
Abstract
This survey paper argues that Walrasian markets and monetary exchan ge are alternative, not complementary, arrangements for coordinating economic activity; that if one realizes this, many informational anomalies and price rigidities that appear "irrational" in a Walrasia n context can be understood as the outcome of maximizing behavior in a monetary economy; and that the precautionary approach to modelin g the demand for money takes on a particular importance in this way of looking at things. Empirical evidence on the demand for money is cite d in support of this point of view, which tends to reinstate the quantity of money as an important economic variable, in contrast to the New Classical vision of the economy whi ch downgrades money's importance.
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Suggested Citation

  • Jonung, Lars & Laidler, David, 1988. "Are Perceptions Of Inflation Rational? Some Evidence For Sweden," University of Western Ontario, Departmental Research Report Series 8808, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:8808
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