Sargent and the unbearable lightness of symmetry

Abstract

Influenced by changes in his environment in the early 1980s, Thomas Sargent tried to serve his interest in finding conceptual integrity of theory and method by using rational expectations to link general equilibrium theory and vector autoregressions. Dead ends loomed large on Sargent's horizon when he tried to fit the a priori bias towards symmetry in general equilibrium theory into this framework and when he became aware of the consequences of his initial decisions. In particular, he turned out to be unable to tackle the hurdles of symmetry among analysts and actors, no-trade theorems, information gathering, error term justification, and policy recommendations. © 1998, Taylor & Francis Group, LLC.