The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Sep, 1977, Volume 45, Issue 6
https://doi.org/0012-9682(197709)45:6<1377:CFUSIS>2.0.CO;2-W
p. 1377-1385
John B. Taylor
This paper examines conditions for the uniqueness of an equilibrium price distribution in stochastic macroeconomic models with rational expectations. A model is developed in which many price distributions, each with a finite variance, satisfy the equilibrium requirements of rationality. Hence, the condition that the variance of the equilibrium price distribution be finite, or equivalently, that the conditionally expected price path be stable, does not guarantee uniqueness. In such cases it is shown that an arbitrary random quantity which is widely publicized can become a leading indicator of prices and, consequently, influence the behavior of actual prices. However, by extending the finite variance (stability) condition to a minimum variance condition, these nonuniqueness problems can be avoided. Such stability or minimum variance conditions suggest a kind of collective rationality which, although not unreasonable, has not yet been fully analyzed in rational expectations models.
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
