Why Does Data Reject the Lucas Critique

Roger Farmer

Annals of Economics and Statistics, 2002, issue 67-68, 111-129

Abstract: This paper examines the consequences for macroeconomic theory of the Favero-Hendry finding that the Lucas critique of econometric policy evaluation is rejected by the data. l revisit the idea that this failure may be explained by models with indeterminate equilibria and l develop a class of expectations rules that l call generalized adaptive expectations. l illustrate how these rules may be implemented in a series of examples.

Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2002:i:67-68:p:111-129

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