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The Lucas Critique and Keynes Response.Considering the History of Macroeconomics

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  • Elke Muchlinski

    (Freie Universität Berlin)

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    Abstract

    Considering the history of macroeconomics it is surprising that Tinbergens theory of policy is identified with so-called Keynesian economics by Lucas and Lucasians. Keynesian macropolicy is accused of neglecting the role of expectations and the effects of any changes of institutions. Due to textual evidence this paper explains that both the disregard of expectations and the institutional evolutionary process can not be addressed to Keynes's analysis.

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    File URL: http://128.118.178.162/eps/mac/papers/0503/0503019.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series Macroeconomics with number 0503019.

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    Length: 33 pages
    Date of creation: 23 Mar 2005
    Date of revision:
    Handle: RePEc:wpa:wuwpma:0503019

    Note: Type of Document - pdf; pages: 33
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    Web page: http://128.118.178.162

    Related research

    Keywords: Keynes on expectations; macroeconomics and modelbuildung contra Lucas and Tinbergen;

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    1. Lawson, Tony, 1995. "The 'Lucas Critique': A Generalisation," Cambridge Journal of Economics, Oxford University Press, vol. 19(2), pages 257-76, April.
    2. Bennett T. McCallum, 2002. "Recent developments in monetary policy analysis: the roles of theory and evidence," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 67-96.
    3. Sargent, Thomas J., 1996. "Expectations and the nonneutrality of Lucas," Journal of Monetary Economics, Elsevier, vol. 37(3), pages 535-548, June.
    4. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
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    7. Alex Cukierman, 2002. "Are contemporary central banks transparent about economic models and objectives and what difference does it make?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 15-36.
    8. Alan S. Blinder, 2000. "Central-Bank Credibility: Why Do We Care? How Do We Build It?," American Economic Review, American Economic Association, vol. 90(5), pages 1421-1431, December.
    9. Muchlinski, Elke, 2003. "Against rigid rules: Keynes's economic theory," Discussion Papers 2003/2, Free University Berlin, School of Business & Economics.
    10. Lucas, Robert Jr., 1986. "Principles of fiscal and monetary policy," Journal of Monetary Economics, Elsevier, vol. 17(1), pages 117-134, January.
    11. Morishima, Michio, 1991. "General Equilibrium Theory in the Twenty-First Century," Economic Journal, Royal Economic Society, vol. 101(404), pages 69-74, January.
    12. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    13. Kirman, Alan, 1989. "The Intrinsic Limits of Modern Economic Theory: The Emperor Has No Clothes," Economic Journal, Royal Economic Society, vol. 99(395), pages 126-39, Supplemen.
    14. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
    15. David C. Colander, 1993. "The Macrofoundations of Micro," Eastern Economic Journal, Eastern Economic Association, vol. 19(4), pages 447-457, Fall.
    16. Summers, Lawrence H, 1991. " The Scientific Illusion in Empirical Macroeconomics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(2), pages 129-48.
    17. Robert Leeson, 1998. "“The Ghosts I Called I Can't Get Rid of Now”: The Keynes-Tinbergen-Friedman-Phillips Critique of Keynesian Macroeconometrics," History of Political Economy, Duke University Press, vol. 30(1), pages 51-94, Spring.
    18. Frank Hahn, 1985. "Money and Inflation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262580624, December.
    19. Boland, Lawrence A, 1998. "Knowledge in Economics: Game-Theoretic versus Market-Process: A Review Article," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(5), pages 604-13, November.
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