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The Lucas Critique: A Lucas Critique

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  • Christian Müller-Kademann

    (Jacobs University Bremen, Department of Economics and Business Administration, Germany)

Abstract

The Lucas critique has been – and continues to be – the cornerstone of modern macroeconomic modelling. In this note we apply the Lucas critique to macroeconomic modelling using deep rational expectations. In conclusion, we point out that Lucas's critique reveals a fundamental flaw in Lucas's own, popular 'solution', i.e., the so-called forward-looking rational expectations models. Heeding Lucas's call for model-consistent policy advice eventually requires an ontological shift in economics – which throws the door wide open to an exciting, hardly-explored field of economic research.

Suggested Citation

  • Christian Müller-Kademann, 2018. "The Lucas Critique: A Lucas Critique," Economic Thought, World Economics Association, vol. 7(2), pages 54-62, November.
    • Handle: RePEc:wea:econth:v:7:y:2018:i:2:p:54
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    References listed on IDEAS

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