Reacting to the Lucas Critique: The Keynesians' Pragmatic Replies

Aurélien Goutsmedt, Erich Pinzón-Fuchs, Matthieu Renault and Francesco Sergi ()
Additional contact information
Francesco Sergi: University of Bristol, https://www.bristol.ac.uk/

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: We illustrate how the Lucas Critique was called into question by Keynesian macroeconomists during the 1970s and 1980s. Our claim is that Keynesians' reactions were carried out from a pragmatic approach, which addressed the empirical and practical relevance of the Critique. Keynesians rejected the Critique as a general principle with no relevance for concrete macroeconometric practice; their rejection relied on econometric investigations and contextual analysis of the U.S. 1970s stagflation and its aftermath. Keynesians argued that the parameters of their models remained stable across this period, and that simpler ways to account for stagflation (such as the introduction of supply shocks into their models) provided better alternatives to improve policy evaluation

Keywords: History of macroeconomics; Lucas Critique; Keynesian macroeconometrics; Stagflation (search for similar items in EconPapers)
JEL-codes: B22 B41 E12 E60 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2017-10
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
ftp://mse.univ-paris1.fr/pub/mse/CES2017/17042.pdf (application/pdf)

Related works:
Working Paper: Reacting to the Lucas Critique: The Keynesians' Pragmatic Replies (2017)
Working Paper: Reacting to the Lucas Critique: The Keynesians' Pragmatic Replies (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:17042

Access Statistics for this paper

More papers in Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne Contact information at EDIRC.
Bibliographic data for series maintained by Lucie Label ().