Sunday, September 25, 2011

The Lucas Critique implications for current policies

I can't resist sharing this article about Robert Lucas, one of the most influential economists of the last 50 years. In an interview, Lucas is asked how his findings relate to the current economic slowdown. Lucas suggests that while a stimulus might have been the right idea in 2008, its time has past. He now supports structural reforms that realign incentives towards growth. This dovetails nicely with his research on the importance of people's expectations and incentives.

See article:
(WSJ 9-24-11) Chicago Economics on Trial by Holman W. Jenkins Jr.

For a 4 min bio on Robert Lucas and an summary of his famous "Lucas Critique"
Short Youtube video clip on Robert Lucas, life and works

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