Robert E. Lucas, Jr.

One of the most influential modern economic theorists, Robert Lucas is the leader of the New Classical school – the ‘modern’ version of the Chicago School. His introduction of the concept of rational expectations in the 1970s helped to decisively bury the Neo-Keynesian orthodoxy and inaugurated a new era of macroeconomics relying on the neo-classical concept of supply-determined equilibrium, best exemplified in modern ‘Real Business Cycle’ theory.

He also made seminal contributions to the theory of investment (with ‘marginal adjustment costs’, 1967), theory of endogenous growth (with ‘human capital’, 1988), theory of asset pricing and the theory of money (with ‘cash-in-advance’). He is also renowned for the ‘Lucas Critique’ (1976) of the use of econometric models for policy purposes.

A professor at Chicago, Lucas won the Nobel prize in 1995.

Major Works of Robert Lucas

– Optimal Investment Policy and the Flexible Accelerator, 1967, IER
– Adjustment Costs and the Theory of Supply, 1967, JPE
– Real Wages, Employment and Inflation, with Leonard A. Rapping, 1969, JPE
– Investment Under Uncertainty, with E.C. Prescott, 1971, Econometrica
– Expectations and the Neutrality of Money, 1972, JPE
– Econometric Testing of the Natural Rate Hypothesis, 1972, in Eckstein, editor, The Econometrics of Price Determination
– Some International Evidence on Output-Inflation Tradeoffs, 1973, AER
– Equilibrium Search and Unemployment, with E. C. Prescott, 1974, JET
– An Equilibrium Model of the Business Cycle, 1975, JPE
– Econometric Policy Evaluation: A critique, 1976, CROCH
– Understanding Business Cycles, 1977, CROCH
– Asset Prices in an Exchange Economy, 1978, Econometrica
– ‘New’ Explanations of the Persistence of Inflation and Unemployment, with T.J. Sargent, 1978, in After the Phillips Curve
– After Keynesian Macroeconomics, with T.J. Sargent, 1978, in After the Phillips Curve
– Rules, Discretion and the Role of the Economic Advisor, 1980, in Fischer, editor, Rational Expectations
– Methods and Problems in Business Cycle Theory, 1980, JMCB
– Studies in Business Cycle Theory
– Equilibrium in a Pure Currency Economy, 1980, Econ Inquiry
– Tobin and Monetarism: A review article, 1981, JEL
– Interest Rates and Currency Prices in a Two-Country World, 1982, JME
– Optimal Fiscal and Monetary Policy in an Economy without Capital, with N.L. Stokey, 1983, JME
– Optimal Growth with Many Consumers, with N. L. Stokey, 1984, JET
– Money in a Theory of Finance, 1984, CROCH
– Money and Interest in a Cash-in-Advance Economy, with N. L. Stokey, 1987, Econometrica
– Models of Business Cycles, 1987
– On the Mechanics of Economic Development, 1988, JME
– Recursive Methods in Economic Dynamics, with N. L. Stokey, 1989
– Liquidity and Interest Rates, 1990, JET
– Why Doesn’t Capital Flow from Rich to Poor Countries?, 1990, AER
– Making a Miracle, 1993, Econometrica
– Lectures on Economic Growth, 2004, HUP