1970s paradigm shift in economic thought, named for American economist Robert Lucas
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The Lucas critique argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data.[1] More formally, it states that the decision rules of Keynesian models—such as the consumption function—cannot be considered as structural in the sense of being invariant with respect to changes in government policy variables.[2] It was named after American economist Robert Lucas's work on macroeconomic policymaking.
The Lucas critique is significant in the history of economic thought as a representative of the paradigm shift that occurred in macroeconomic theory in the 1970s towards attempts at establishing micro-foundations.
^Lucas, Robert (1976). "Econometric Policy Evaluation: A Critique" (PDF). In Brunner, K.; Meltzer, A. (eds.). The Phillips Curve and Labor Markets. Carnegie-Rochester Conference Series on Public Policy. Vol. 1. New York: American Elsevier. pp. 19–46. ISBN 0-444-11007-0. Archived (PDF) from the original on 2021-11-05.
^Sargent, Thomas (1987). "Lucas's Critique". Macroeconomic Theory (Second ed.). Orlando: Academic Press. pp. 397–98. ISBN 0-12-619751-2.
The Lucascritique argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed...
was changed. The so-called Lucascritique followed similar criticism undertaken earlier by Ragnar Frisch, in his critique of Jan Tinbergen's 1939 book...
should be unaffected by policy changes. Partly as a response to the Lucascritique, economists of the 1980s and 1990s began to construct microfounded macroeconomic...
changed. Modern complex econometric models tend to be designed with the Lucascritique and rational expectations in mind, but Robert Solow argued that some...
Lucas in Wiktionary, the free dictionary. Lucas or LUCAS may refer to: Lucas (surname) Lucas (given name) Luca Family Singers, also known as "lucas ligner...
aforementioned aspects of the economy. Particularly in the wake of the Lucascritique, much of modern macroeconomic theories has been built upon microfoundations—i...
inflation. Robert Lucas and other new classical macroeconomists criticized Keynesian models that did not work under rational expectations. Lucas also argued...
expectations, monetary policy only had a limited impact. Lucas also made an influential critique of Keynesian empirical models. He argued that forecasting...
Robert Lucas, Jr. and Milton Friedman respectively forced a labored rethinking of Keynesian economics. In particular, Lucas designed the Lucascritique primarily...
influential endorsement of the study of microfoundations was Robert Lucas, Jr.'s critique of traditional macroeconometric forecasting models. After the apparent...
model consumption. He created his consumption theory in response to the Lucascritique. Using Euler equations to model the random walk of consumption has become...
implications for many economic discussions, among which were the so-called Lucascritique and the presentation of real business cycle models. During the 1980s...
reduced-form estimation within "microeconometrics" is related to the Lucascritique of reduced-form macroeconomic policy predictions. When the Cowles Commission...
instability. Another influential school of thought was based on the Lucascritique of Keynesian economics. This called for greater consistency with microeconomic...
production Game theory Homo economicus Market price Lucas aggregate supply function LucascritiqueLucas island model Optimism Optimism bias Perfectionism...
models (following the rational expectations revolution and Robert Lucas, Jr.'s Lucascritique of non-microfounded models). If the response to the decision...
originated by Knut Wicksell. Although separate from the Lucascritique, the Barnett and Lucascritiques share the view that models based on internally inconsistent...
abundant, possibly leading to inflation. Lorenz curve loss aversion LucascritiqueLucas paradox Lundberg lag luxury good macroeconomic model macroeconomic...
often in conflict with a central tenet of modern macroeconomics, the Lucascritique - or rational expectations - which states that observed relationships...
at more generic correlations. Third, the new synthesis addresses the Lucascritique and uses rational expectations. However, based on sticky prices and...
Noda, Shunya; Okumura, Kyohei; Hashimoto, Yoshinori (26 June 2019). "A LucasCritique to the Difficulty Adjustment Algorithm of the Bitcoin System". SSRN...
unchanged while policy changes is inadmissible as a substantive isolation (Lucascritique). The concept of ceteris paribus is crucial for economists and can be...
inflation. Freshwater theories New classical macroeconomics Homo economicus Lucascritique Efficient-market hypothesis Rational expectations Real business cycle...
economics, by the Lucascritique and by criticisms from Hayek's Austrian School. So successful were these criticisms that by 1980 Robert Lucas claimed economists...
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