Is Elegance Useful? Rationality in the Dynamic and Optimal Economic Model

Abstract

The purpose of this thesis is to discuss the development of the macroeconomic models in perspective and analyze recent models dominating the economics theory along with discussing a new dynamic model which considers all criticisms of the prior models and incorporates different approaches to the economic fluctuations. I am representing several crucial modifications in this model. After running several experiments, the model claimed that incorporating rational expectations in the model helps to present better predictions regarding the economy.