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Minimize Regulations to Regulate - Extending the Lucas Critique

Author

Listed:
  • Sugata Marjit

    (City University of Hong Kong)

  • Amit K. Biswas
  • Hamid Beladi

Abstract

Lucas (1976) argued that interventionist policies in macroeconomics may fail because the policies themselves affect the optimal behavior of private agents and hence the associated response parameters. We extend Lucas's argument and propose that a highly controlled and regulated environment leads to misinterpretation of official statistics and therefore distorts policy predictions based on such information. In a way policies will have predictability in a more open and less regulated environment.

Suggested Citation

  • Sugata Marjit & Amit K. Biswas & Hamid Beladi, 2005. "Minimize Regulations to Regulate - Extending the Lucas Critique," Macroeconomics Working Papers 22892, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:macroe:22892
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    Cited by:

    1. is not listed on IDEAS
    2. Subhasish Das & Amit K. Biswas, 2021. "Trade Mis-Invoicing Between India & USA: An Empirical Exercise," Foreign Trade Review, , vol. 56(1), pages 7-30, February.
    3. Samir Kumer Das & Amit K. Biswas, 2023. "Trade Data Falsification and Informal Capita Movement: A Study of Bangladesh with Major Asian Trade Partners," Foreign Trade Review, , vol. 58(4), pages 467-483, November.

    More about this item

    Keywords

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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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