Working Paper: CEPR ID: DP16953
Authors: Harald Uhlig
Abstract: This paper is an overview from a personal perspective on the various ways Lucas has shaped today’s economics in general and in terms of ‘Chicago economics’ in particular. In honor of the 50th anniversary of its publication, much focus is given to his 1972 neutrality paper and its impact. I discuss how the paper was a trigger of the subsequent emergence of rational expectations macroeconomics. Further, I touch upon his fundamental contributions to growth theory, asset pricing and the characteristic use of the Bellman equations. After covering these topics, the paper concludes with a portrayal of the Money and Banking Workshop to describe the environment that Lucas established at the Chicago department, and to illustrate his enduring influence on the culture of teaching and discussing macroeconomics at the University of Chicago.
Keywords: Robert E. Lucas; Chicago Economics; Monetary Neutrality; Microfoundations; Business Cycle Theory; Growth Theory
JEL Codes: B22; B31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Lucas's 1972 neutrality paper (D74) | emergence of rational expectations macroeconomics (D84) |
| Lucas's theoretical framework (C91) | understanding of monetary neutrality (E49) |
| shift in understanding of monetary neutrality (E49) | acceptance of rational expectations in macroeconomic modeling (D84) |
| shift in understanding of monetary neutrality (E49) | implications for monetary policy (E52) |
| Lucas's contributions to growth theory and asset pricing (G19) | foundational principles guiding economic research (B40) |
| Bellman equation (popularized by Lucas) (C61) | standard tool in micro-founded macroeconomics (E13) |
| Lucas's influence (Y70) | culture of teaching and discussing macroeconomics at the University of Chicago (B22) |
| Lucas's legacy (Y70) | current pedagogical approaches and research agendas (B53) |