Lucas criticism

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The Lucas Critique is an economic theoretical concept of modern macroeconomics that emerged in the 1970s to explain economic behavior and its effects. The father of the concept is the Nobel laureate in economics, Robert E. Lucas . He criticizes (hence the name) the existing macroeconomic models for being based on static expectations. For a more precise meaningfulness, however, Lucas suggested the inclusion of rational expectations .

The Lucas criticism reads: "Since the structure of an econometric model includes optimal decision-making rules for economic subjects and since optimal decision-making rules change systematically with the time series data relevant for economic policy, every change in economic policy will change the structure of the econometric model”.

Lucas criticizes the fact that an economic law no longer works at the moment when economic policy tries to exploit it. So if economic policy z. For example, if you want to accept higher inflation on the basis of the Phillips curve , because this is associated with lower unemployment according to the Phillips curve , then the Phillips context suddenly no longer applies. This can be justified by the fact that a changed economic policy influences the expectations of economic subjects (and thus the framework of economic policy itself).

The Lucas criticism was thus also a criticism of the use of econometric models in economic policy , since the behavioral parameters used in these models are assumed to be exogenous , but are in fact endogenous .

literature

  • Cruccolini, Roberto (2011): "Primacy of Form: On Methodology and History in Modern Macroeconomics, Suedwestdeutscher Verlag für Hochschulschriften, Section 3.1. ISBN 9783838123622 Digitally available at [1] .
  • Lucas, Robert E. (1976), "Econometric Policy Evaluation: A Critique.", Carnegie-Rochester Conference Series on Public Policy, Volume 1, pp. 19-46. doi : 10.1016 / S0167-2231 (76) 80003-6

References

  1. ↑ Lucas, Robert E. (1976): "Econometric Policy Evaluation: A Critique.", Carnegie-Rochester Conference Series on Public Policy, Volume 1, p. 41.