Book contents
- Frontmatter
- Contents
- Preface
- List of abbreviations
- 1 Introduction
- Part 1 Methodological foundations of macroeconomics
- Part II Keynes after Lucas
- 8 Lucas's scientific paradigm
- 9 Lucas's heuristic model
- 10 The real equilibrium business cycle and Lucas's attempt at a synthesis
- 11 Keynes's heuristic model: general observations
- 12 Money and production in Schumpeter and Keynes: two dichotomies
- 13 Keynes's heuristic model: methodological aspects
- 14 Conclusions
- References
- Subject index
- Author index
9 - Lucas's heuristic model
Published online by Cambridge University Press: 05 January 2012
- Frontmatter
- Contents
- Preface
- List of abbreviations
- 1 Introduction
- Part 1 Methodological foundations of macroeconomics
- Part II Keynes after Lucas
- 8 Lucas's scientific paradigm
- 9 Lucas's heuristic model
- 10 The real equilibrium business cycle and Lucas's attempt at a synthesis
- 11 Keynes's heuristic model: general observations
- 12 Money and production in Schumpeter and Keynes: two dichotomies
- 13 Keynes's heuristic model: methodological aspects
- 14 Conclusions
- References
- Subject index
- Author index
Summary
While in the physical sciences the investigator will be able to measure, on the basis of a prima facie theory, what he thinks important, in the social sciences what is treated as important is often that which happens to be accessible to measurable magnitudes. It can hardly be denied that such a demand quite arbitrarily limits the facts that are to be admitted as possible causes of the events in the real world.
(Hayek, 1974)Introduction
In this chapter I intend to discuss the heuristic model of Lucas (for the definition of‘heuristic model’ here adopted see section 1.4 above). The task is made easier by the fact that Lucas, together with Sargent, has given us a thorough version of it (Lucas and Sargent, eds., 1981).
For convenient comparison I will give an algebraic representation of the model, using the symbols adopted by Lucas and Sargent, in section 9.2. I shall also provide a representation of the model in the language of block diagrams, to aid an intuitive perception of its meaning, and to facilitate comparison with Keynes's heuristic model, which I shall reformulate in the same language in chapter 11.
In section 9.3 I will consider a few criticisms raised against Lucas's heuristic model (in particular by Keynesian economists and followers of Sims's VAR econometrics). I shall reject these criticisms insofar as they are based on alleged logical weaknesses, but I will show in section 9.4 that the applicability scope of Lucas's methodology is very restricted. Conclusions will follow in section 9.5. In appendix 9A I will briefly set out and discuss Sims's heuristic model which has been recently counterposed to that of Lucas and Sargent.
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- Information
- Methodological Foundations of MacroeconomicsKeynes and Lucas, pp. 143 - 162Publisher: Cambridge University PressPrint publication year: 1991