1.   It was this criticism of the adaptive expectations hypothesis that led to the development of the rational expectations hypothesis.

2.   More formally, we can test the rational expectations hypothesis by testing the joint null hypothesis,.

3.   Possession of such direct observations on expectations would allow us to test the validity of the rational expectations hypothesis in two ways.

4.   Therefore the rational expectations hypothesis suggests a valid method of incorporating additional information when estimating macroeconomic models which contain expectation terms.

5.   This aggregate supply curve is of fundamental importance to the macroeconomic policy conclusions often drawn from the rational expectations hypothesis.

6.   The expectations hypothesis argues that the long-term interest rate is a geometric average of expected future short-term rates.

7.   The expectations hypothesis by itself is insufficient to explain this, since under constant inflationary expectations, the expectations hypothesis predicts a flat yield curve.

8.   According to the expectations hypothesis, which assumes rational behaviour by risk-neutral investors, the futures price will not differ systematically from the realized spot price.

9.   We will assume for simplicity that the expectations hypothesis holds, so that there is no risk premium in the futures rate.

10.   The arrival on the scene of the rational expectations hypothesis sent shock waves throughout the whole of macroeconomics.