My tribute to Robert E. Lucas

For Bloomberg, here is one bit:

Lucas’s primary contribution was to insist that all assumptions about expectations be spelled out and tested to see if they were consistent with all other parts of the argument. For instance, if you wanted to assert that people would respond to one set of government actions but not another, you had to outline why that might be the case. In retrospect it seems simple, but Lucas (with co-authors, notably Nancy Stokey) was the person who showed how to do it. The end result was a reworking of virtually everyone’s macroeconomic arguments — monetarist, Keynesian or otherwise.

And this:

I recall Lucas giving a seminar at Harvard in 1984, during my graduate studies there. With his no-nonsense manner and dark suit, he reminded me of a character from a Chicago gangster movie. Yet he was also charming, in part because he could see so quickly where every argument or critical point was headed. Many of the graduate students showed up with a hostile attitude, protective of their more Keynesian approaches and convinced they could expose the simplistic assumptions of Lucas’s models. Ninety minutes later, it was clear that those assumptions were not so vulnerable after all.

Lucas survived that encounter unscathed, and perhaps made a few converts too. He will be missed, but his ideas and arguments will continue to thrive.

Recommended.

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