A Precursor to Muth: Tinbergen's 1932 Model of Rational Expectations

This paper describes a model, published in 1932, in which explicitly rational expectations are used to study a dynamic problem of intertemporal inventory allocation. The model is very similar to Muth (1961), except that the stochastic process in the latter is serially correlated, whereas in Tinbergen's model the disturbances are serially uncorrelated. Hence, Tinbergen was able to solve a rational expectations model thirty years before Muth's much more well known contribution. Copyright 1991 by Royal Economic Society.