5.0 out of 5 stars
great collection by the leading macroeconomist of our time, May 24, 2011
This review is from: Studies in Business-Cycle Theory (Paperback)
Lucas is a wonderful writer, but here and elsewhere he's aiming at PhD students and above. If you're one of those, this contains some classics. "Econometric policy evaluation" is a personal favorite. The less mathematical essays are engaging in a different way, touching on how the field of macroeconomics has changed since the 1920s, in part because we have better tools than we used to. Here I'd say "Methods and problems" is the highlight. "Review of the McCracken Report" is laugh out loud funny as a critique of mushy policy advice.
Brady's review is -- what to say? -- silly. It misses the point by so much it's hard to know what the author was getting at. If that's not obvious to you, this probably isn't the book for you.
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3 of 6 people found the following review helpful:
5.0 out of 5 stars
Truly exceptional, February 27, 2002
By A Customer
The book includes articles that at this moment have become classical in economic theory. Being written by the leader of new classical economics this book helps one to enter the world of rational expectations macroeconomics.
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4 of 14 people found the following review helpful:
1.0 out of 5 stars
Lucas simply assumes that the time series data is normally distributed, August 12, 2007
This is one of the worst books ever written by an economist.Lucas simply assumes that all markets can be represented by normal probability distributions(joint,bivariate,multivariate, or log normal).He uses his magic wand to proclaim that there is no such thing as uncertainty or,if there is,it is impossible to analyze.Lucas has never done any type or kind of goodness of fit test on the time series data he claims that his theory is representing/analyzing.It should not come as a surprise that there is no difference between the macroscopic rational expectations claim that all the distributions that decision makers use are normal distributions and Eugene Fama's earlier analysis of stock market prices.Fama discovered that the data fit the Cauchy distribution best.No matter.Fama just assumed that the distributions were normal.This is the foundation for the Efficient Market Hypothesis.I have been unable to discern any significant difference in the statistical modeling of Fama or Lucas.Everything is based on the standard deviation being THE correct measure of risk.There can be no uncertainty(Knight and Keynes) or ambiguity(Daniel Ellsberg) in the metaphysical LucasWorld or FamaWorld where all decision makers are claimed to know that all markets are modeled correctly by normal probability distributions.There is no empirical support for the Lucas claim that "...business cycles can be viewed as repeated instances of essentially similar events...'(Lucas,pp.223-224),which will then be analyzed using the standard deviation, sigma, as a measure of risk.Keynes essentially annihilated Tinbergen's similar claim that he could use the normal distribution to forecast changes in investment spending and turning points in the business cycle.The Lucas -Fama approach is a more detailed version of Milton Friedman's similar assumption that all markets can be represented as being normally distributed .The additivity property then allows Friedman,Lucas, and Fama to add the sigmas to come up with a macroscopic normal distribution.This requires that Ellsberg's rho be equal to 1 so that there is no ambiguity.
There are three recent books that would allow a reader to grasp and understand the essential nature of decision making under the uncertainty/wild risk generated in the stock and financial markets and/or the macroeconomy.Ellsberg's " Risk, Ambiguity,and Decision "(2001),Mandelbrot and Hudson's" The (Mis)Behavior of Markets "(2004), and N N Taleb's " The Black Swan
"(2007) are light years ahead of Lucas.Lucas's work was already dealt with by Keynes in the GT on p.306.Lucas simply assumes that the elasticity e has a value of 1(no uncertainty and no liquidity preference).Lucas can't even form an economic analysis if e<1 because he has admitted that he can't provide any sort of analysis in such situations.Lucas,like Friedman,Prescott and Fama,is a great Ptolomaic economist.He can brilliantly manipulate the artificially constructed system of equations representing epicycles and eccentrics(orbits)that do not exist.Lucas manipulates the phantasms of a system that does not exist except as a mental creation of his own mind.His epicycle is the normal distribution.He piles one on top of another and adds them all up.Unfortunately,Lucas is an economist and not a scientist.Scientists ultimately must connect their theories and models to the actual existing empirical and experimental evidence .Economists ,apparently,do not.What Lucas means by " Studies " is the empty statistical and mathematical manipulation of symbols on pieces of paper that represent means,expected values,and variances(standard deviations) that do not exist in the real world.They,apparently,do exist in LucasWorld.
It would be impossible for Lucas to receive a real Nobel prize.The misnamed Nobel Memorial Prize in Economic Science contains two false statements.First,it is not a Nobel Prize.Second,economics is not a science.
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