Risk and business cycles: Reply to Rosser

Rosser's thoughtful and careful review of my book on business cycles reflec ts a different methodological stance than my own, I believe that economic t heory and macroeconomics cannot escape using the concept of risk, even thou gh, as Rosser points out, risk is not a simple unidimensional magnitude in many circumstances. I view the rational expectations assumption as a useful way of presenting a theory, rather than as a descriptive account of real-w orld expectations.