Author(s)

Frank Hespeler

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This paper approaches the problem of the potential for complex-valued solutions within linear macroeconomic models with rational expectations. It finds that these problems are associated with a specific solution method for the underlying model. The paper establishes that the danger of complex-valued solutions always can be eliminated by forcing those solutions to fulfill additional constraints. These constraints are essentially restrictions on the degrees of freedoms in indeterminate solutions.

Rational Expectation Models, Indeterminacy, Potentially Complex Coefficients

F. Hespeler, "Solution for Rational Expectation Models Free of Complex Numbers," Theoretical Economics Letters, Vol. 1 No. 3, 2011, pp. 47-52. doi: 10.4236/tel.2011.13011.