Lucas critique

He created his consumption theory in response to the Lucas critique.

The Lucas critique is, in essence, a negative result.

Third, the new synthesis addresses the Lucas critique and uses rational expectations.

His approach is differentiated from earlier theories by the introduction of the Lucas critique to modeling consumption.

Another influential school of thought was based on the Lucas critique of Keynesian economics.

During the 1970s rational expectations appeared to have made previous macroeconomic theory largely obsolete, which culminated with the Lucas critique.

Closely related ideas are known under different names, e.g. Goodhart's law, and the Lucas critique.

In particular, Lucas made the Lucas critique that cast doubt on Keynesian model.

DSGE models have another theoretical advantage, avoiding the Lucas critique.

The Lucas critique states that it is improbable to assume that wage setters would not consider changes in policy when forming their expectation.

Economic journalists have referred to this as the Sumner Critique, akin to the Lucas critique.

Lucas critique - Robert Lucas, Jr.

Further doubt is cast on the Keynesian approach to macroeconomic policy by what is known as the Lucas critique (see Lucas, 1976).

The distinction between structural and reduced-form estimation within "microeconometrics" is related to the Lucas critique of reduced-form macroeconomic policy predictions.

We have used a simple model to illustrate the Lucas critique, but since the point is an important one with wide applications it is worth stating it more generally.

Particularly in the wake of the Lucas critique, much of modern macroeconomic theory has been built upon 'microfoundations'-i.e. based upon basic assumptions about micro-level behavior.

New Keynesian economists responded to the new classical school by adopting rational expectations and focusing on developing micro-founded models that are immune to the Lucas critique.

A related issue is that ACE models which start from strategies instead of preferences may remain vulnerable to the Lucas critique: a changed policy regime should generally give rise to changed strategies.

The Lucas critique (1976) pointed out that policy recommendations based on observed past macroeconomic relationships may neglect subsequent behavioral changes by economic agents, which, when added up, would change the macroeconomic relationships themselves.

One of the main reasons macroeconomists seek to build microfounded models is that, unlike more traditional macroeconometric forecasting models, microfounded models should not, in principle, be vulnerable to the Lucas critique.

In 1976, Robert Lucas of the Chicago school of economics introduced the Lucas critique, which called into question the logic behind Keynesian macroeconomic policy making and leading to New classical macroeconomics.

The advantage of this approach is that market incompleteness and the available state contingent claims respond to the economic environment, which makes the model appealing for policy experiments since it is less vulnerable to the Lucas critique.

If a change in government policies induces changes in consumers' behavior on the same time scale, the assumption that consumer behaviour remains unchanged while policy changes is inadmissible as a substantive isolation (Lucas critique).

He developed the "Lucas critique" of economic policymaking, which holds that relationships that appear to hold in the economy, such as an apparent relationship between inflation and unemployment, could change in response to changes in economic policy.

The Lucas critique suggests that if we want to predict the effect of a policy experiment, we should model the "deep parameters" (relating to preferences, technology, and resource constraints) that are assumed to govern individual behavior: so-called "microfoundations."