Lucas on Keynesian Economics

I do not have any other words: I am amazed at the power and the radicalism of these sentences. This short quotation is from Lucas talking about his revolution.

“The main development I want to discuss has already occurred: Keynesian economics is dead […]. I do not exactly know when this happened but it is true today and it was not true two years ago. […] Leading journals are not getting Keynesian papers submitted any more. I suppose I, and with many others, were in on the kill in an intellectual sense, but I do not say this as any kind of boast, even with much pleasure. Just a fact. True, there are still leading Keynesians – in academics and government circles – so Keynesian economics is alive in this sense – but this is transient, because there is no fresh source of supply.”

However, the exact nature of the Lucasian revolution and its relationship with Keynesian economics are still problematic, I think.


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