Interpreting Economic Time Series

@article{Sargent1981InterpretingET,
  title={Interpreting Economic Time Series},
  author={Thomas J. Sargent},
  journal={Journal of Political Economy},
  year={1981},
  volume={89},
  pages={213 - 248}
}
  • T. Sargent
  • Published 1 April 1981
  • Economics
  • Journal of Political Economy
This paper explores some of the implications for econometric practice of the principle that people's observed behavior will change when their constraints change. In dynamic contexts, a proper definition of people's constraints includes among them laws of motion that describe the evolution of the taxes they must pay and the prices of the goods that they buy and sell. Changes in agents' perceptions of these laws of motion (or constraints) will in general produce changes in the schedules that… 

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