ABSTRACT
The Muth model is a rational expectation model involving a current endogenous expected variable. More precisely, the structural form of the model consists of an equation explaining the endogenous variable yt in terms of the expectation E[yt|It−1] and various exogenous variables among which some are observable and some are not. As shown in section 2, this equation has a unique solution. This uniqueness property greatly simplifies the analysis. It is also useful for practical purposes.
