They just get really pissy and wax endlessly about their silly "intellectual history" if you ever ask them...That's not the point bro, though you seem correct. Cheltenham: Edward Elgar. I rather think that we should not err again in hastily ranking a solution higher than a proper analysis of the problem just because it seems to be a solution.We should not do so even though the history of the Lucas critique has shown that the “solution” seems to be more important than the critique.
AREN'T subjected to Lucas (1976). Financial modelers seldom have any structural framework. al. It does not follow, however, that the discovery and the description of the problem itself is unimportant. 25 0 obj Oxford University Press.Goutsmedt, A. et al. I am sure that the reviewer’s input will thus significantly benefit the readers of the article.Goutsmedt, A., Pinzon-Fuchs, E., Renault, M. and Sergi, F. (2016). Wall Street heavily depends on such ST models which often go wrong.
Introduction Tile fact that nominal prices and wages tend to rise more rapidly at tile peak of the business cycle than they do in the trough has been well recognized from the time when tile cycle was first perceived as a … In fact, applying the Lucas critique to the Lucas critique itself is, in my view, a contribution to the desired critical approach.The reviewer also comments on some specific issues not yet mentioned such as the definition of DRE and the question of whether or not the Lucas critique yields an ontological message and what the ultimate goal of macroeconomic research is.I will refrain from posting my answers to these issues here also in order to save space. However, the really serious point here is that Lucas's answer to his own solution to his own critique should be subjected to his own critique. The main argument is that that the parameters of the econometric models used for policy analysis and of course predictions should account more carefully for expectations. The Lucas critique, named for Robert Lucas's work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data. Let us be serious about this. In this note we apply the Lucas critique to macroeconomic modelling using deep rational expectations. The inference that perinanent inflation will therefore induce a permanent economic high …
AREN'T subjected to Lucas (1976). As a result, these parameters are not necessary given but variable. This is not subject to the Lucas critique when the model is done properly. In addition, the adoption of the standard narrative leads the author to adopt a vision about the macroeconometric models of the 1960s and 1970s that is not necessarily fair. 1) One of the main propositions in the paper, namely that macroeconomics should introduce Keynes’s concept of fundamental uncertainty is, in my opinion, insufficiently treated. However, the really serious point here is that Lucas's answer to his own solution to his own critique should be subjected to his own critique.
0000008381 00000 n 95, No. 0000007552 00000 n Therefore, although I very much endorse the idea of a holistic approach to the history of the Lucas critique, I think it justified to start with “the `standard narrative’ of the history of macroeconomics built by Robert Lucas himself and by other practitioners of macroeconomics” (Mr. Pinzon-Fuchs). Most macromodels are, in fact, face the test map. Therefore, what is considered a solution to the inconsistency problem of economic policy modelling is, in fact, not a solution. The solution, Lucas said, was to explicitly model the behavior of human beings, and to only use macro models that took this behavior int… on first microeconomic principles became widespread after the Lucas critique (Lucas 1976).
Consider the Lucas Critique in a way you would consider a potentially omitted variable. I think that the author’s proposition needs to be thoroughly researched and discussed and that, to do so, the author should study and refer to Keynes (1921) as well as to the secondary literature that also focuses on Keynes’s ideas on uncertainty and probability. 36 0 obj Lucas’ research has been pursued by the new classicists. A treatise on probability, Cambridge University Press, Cambridge.Keynes, J. M. (1937).