RATIONAL EXPECTATIONS AND INFORMATION THEORY

This thesis examines the relationship between the rational expectations flexible-price macroeconomic model and the pure theory of information originally developed within the electronic communications disciplines. The thesis first develops the rational expectations macromodel, including discussions of the model's assumptions, robustness, econometric issues, and important empirical results. The pure theory of information is then developed, and the "polar cases" of full information and complete information deprivation are examined. Finally, a generalized model of information acquisition and "transmission noise" are developed within the rational expectations framework.