Robert Lucas Jr.

Last updated
Robert Emerson Lucas Jr.
Born (1937-09-15) September 15, 1937 (age 85)
NationalityAmerican
Spouse Nancy Stokey
Institution Carnegie Mellon University
University of Chicago
Field Macroeconomics
School or
tradition
New classical macroeconomics
Alma mater University of Chicago (BA, MA, PhD)
Doctoral
advisor
H. Gregg Lewis
Dale W. Jorgenson
Doctoral
students
Marcel Boyer
Costas Azariadis
Jean-Pierre Danthine
Boyan Jovanovic
Paul Romer
Esteban Rossi-Hansberg
Benjamin Moll
Contributions Rational expectations
Lucas critique
Awards Nobel Memorial Prize in Economic Sciences (1995)
Information at IDEAS / RePEc

Robert Emerson Lucas Jr. (born September 15, 1937) is an American economist at the University of Chicago, where he is currently the John Dewey Distinguished Service Professor Emeritus in Economics and the College. Widely regarded as the central figure in the development of the new classical approach to macroeconomics, [1] he received the Nobel Prize in Economics in 1995 "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy". [2] [3] He has been characterized by N. Gregory Mankiw as "the most influential macroeconomist of the last quarter of the 20th century." [4] As of 2020, he ranks as the 11th most cited economist in the world. [5]

Contents

Biography

Lucas was born in 1937 in Yakima, Washington, and was the eldest child of Robert Emerson Lucas and Jane Templeton Lucas.

Lucas received his B.A. in History in 1959 from the University of Chicago. Lucas attended the University of California, Berkeley as a first-year graduate student, but he left Berkeley due to financial reasons and returned to Chicago in 1960, earning a PhD in Economics in 1964. [6] His dissertation "Substitution between Labor and Capital in U.S. Manufacturing: 1929–1958" was written under the supervision of H. Gregg Lewis and Dale Jorgenson. [7] Lucas studied economics for his PhD on "quasi-Marxist" grounds. He believed that economics was the true driver of history, and so he planned to immerse himself fully in economics and then return to the history department. [8]

Following his graduation, Lucas taught at the Graduate School of Industrial Administration (now Tepper School of Business) at Carnegie Mellon University until 1975, when he returned to the University of Chicago. [9]

Lucas was elected to the American Academy of Arts and Sciences in 1980, [10] the National Academy of Sciences in 1981, [11] and the American Philosophical Society in 1997. [12]

After his divorce from Rita Lucas, he married Nancy Stokey. They have collaborated in papers on growth theory, public finance, and monetary theory. Lucas has two sons: Stephen Lucas and Joseph Lucas. [6]

A collection of his papers is housed at the Rubenstein Library at Duke University. [13]

Contributions

Rational expectations

Lucas is well known for his investigations into the implications of the assumption of the rational expectations theory. Lucas (1972) incorporates the idea of rational expectations into a dynamic general equilibrium model. The agents in Lucas's model are rational: based on the available information, they form expectations about future prices and quantities, and based on these expectations they act to maximize their expected lifetime utility. He also provided sound theory fundamental to Milton Friedman and Edmund Phelps's view of the long-run neutrality of money, and provide an explanation of the correlation between output and inflation, depicted by the Phillips curve.

Lucas critique

Lucas (1976) challenged the foundations of macroeconomic theory (previously dominated by the Keynesian economics approach), arguing that a macroeconomic model should be built as an aggregated version of microeconomic models while noting that aggregation in the theoretical sense may not be possible within a given model. He developed the "Lucas critique" of economic policymaking, which holds that relationships that appear to hold in the economy, such as an apparent relationship between inflation and unemployment, could change in response to changes in economic policy. That led to the development of new classical macroeconomics and the drive towards microeconomic foundations for macroeconomic theory. [14]

Other contributions

Lucas developed a theory of supply that suggests people can be tricked by unsystematic monetary policy; the Uzawa–Lucas model (with Hirofumi Uzawa) of human capital accumulation; and the "Lucas paradox", which considers why more capital does not flow from developed countries to developing countries. Lucas (1988) is a seminal contribution in the economic development and growth literature. Lucas and Paul Romer heralded the birth of endogenous growth theory and the resurgence of research on economic growth in the late 1980s and the 1990s.

He also contributed foundational contributions to behavioral economics, and provided the intellectual foundation for the understanding of deviations from the law of one price based on the irrationality of investors.

In 2003, he stated, about 5 years before the Great Recession, that the "central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades." [15]

He also proposed the Lucas Wedge which tries to show how much higher GDP would be in the presence of proper policy.

Bibliography

See also

Notes

  1. Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origin, Development and Current State. Cheltenham: Edgar Elgar. pp. 220–223. ISBN   978-1-84542-208-0.
  2. "Robert E. Lucas, Jr. | American economist". Encyclopedia Britannica. Retrieved 2017-08-02.
  3. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1995". Nobel Foundation. Retrieved 2008-10-14.
  4. Mankiw, N. Gregory (September 21, 2009). "Back In Demand". Wall Street Journal.
  5. "Top 10% Authors, as of August 2020".
  6. 1 2 "Robert E. Lucas Jr. - Biographical". www.nobelprize.org. Retrieved 2016-11-16.
  7. Andrada, Alexandre F. S. (2014). "Understanding Robert E. Lucas Jr. His Influence and Influences". SSRN   2515932.{{cite journal}}: Cite journal requires |journal= (help)
  8. Roberts, Russ (February 5, 2007). "Lucas on Growth, Poverty and Business Cycles". EconTalk . Library of Economics and Liberty.
  9. Pressman, Steven (1999). Fifty Major Economists . London: Routledge. pp.  193–197. ISBN   978-0-415-13481-1.
  10. "Robert Emerson Lucas". American Academy of Arts & Sciences. Retrieved 2021-12-10.
  11. "Robert E. Lucas, cons_suffix". www.nasonline.org. Retrieved 2021-12-10.
  12. "APS Member History". search.amphilsoc.org. Retrieved 2021-12-10.
  13. "Robert E. Lucas Papers, 1960–2004 and undated". Rubenstein Library, Duke University.
  14. "New Classical Macroeconomics: Robert Lucas | Policonomics". policonomics.com. Retrieved 2017-08-02.
  15. "Fighting Off Depression". The New York Times. January 4, 2009.
  16. Jucas, Robert E. Jr.; Moll, Benjamin (2014). "Knowledge Growth and the Allocation of Time". Journal of Political Economy. doi: 10.3386/w17495 . Retrieved 9 April 2019.

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References

Awards
Preceded by Laureate of the Nobel Memorial Prize in Economics
1995
Succeeded by
Academic offices
Preceded by President of the American Economic Association
2002–2003
Succeeded by