UPDATE (4/3/2022): Reupping this post with the response to my query sent by Brad DeLong.
I’m writing this post in hopes of eliciting some guidance from readers about the three propagation mechanisms to which Robert Lucas and Thomas Sargent refer in their famous 1978 article, “After Keynesian Macroeconomics.” The three propagation mechanisms were mentioned to parry criticisms of the rational-expectations principle underlying the New Classical macroeconomics that Lucas and Sargent were then developing as an alternative to Keynesian macroeconomics. I am wondering how subsequent research has dealt with these propagation mechanisms and how they are now treated in current macro-theory. Here is the relevant passage from Lucas and Sargent:
A second line of criticism stems from the correct observation that if agents’ expectations are rational and if their information sets include lagged values of the variable being forecast, then agents’ forecast errors must be a serially uncorrelated random…
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Utopia, you are standing in it! 
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