Expression of Rational Expectations in Public Governance
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The increase in citizens’ expectations creates new growing challenges to the system of public governance. This management involves complex processes and interactions that shape and implement public policies, and affect quality of life. One of the factors of successful governance is the adaptation of rational expectations. Rational expectations are linked to the process of forecasting. In other words, citizens’ expectations and actions are adjusted on the basis of future. Also, forecasting the possible consequences of government decisions or possible actions of rulling classes, economic stakeholders can make decisions in advance. The contemporary activities of public administration should be based on the principles of expectations management. Economic stakeholders must identify the government’s activities, reasons for the activities or fiscal policy measures when regulating budget. This way expectations are formed. In other words, expectations in the public administration have to recognize the management functions in shaping policies, i.e. conflict resolution, policy leadership, policy initiation and formulation, establishment of targets and resource allocation. Public governance requires the use of all available relevant information to formulate one’s forecast about prices, interest rates, government’s policies and management etc.