Robert Lucas has died at the age of 85. Lucas was a leading mainstream neoclassical economist at the University of Chicago – the bastion of neoclassical equilibrium economic theory. In 1995, Lucas received a ‘Nobel prize’ for his theory of ‘rational expectations’. He was regarded by Greg Mankiw, the author of the main mainstream economics textbook used in universities, as “the most influential macroeconomist of the last quarter of the 20th century.”
It is an irony, given the body of his work, that when Lucas started studying economics, he considered himself a “quasi-Marxist” because he reckoned that it was the economic foundation of society that was the driver of history, not the ideas of individuals. The irony is that his main contribution to mainstream economics was eventually to present a theory that economic change was driven by the ‘rational’ action of ‘agents’ i.e, individuals as consumers.
What is ‘rational expectations’…
View original post 845 more words