History of Macroeconomics

Robert J. Gordon and the Introduction of the Natural Rate Hypothesis in the Keynesian Framework

This article studies the dissemination of the Natural Rate of Unemployment Hypothesis (NRH) in macroeconomics during the 1970s, by studying the reaction of Robert J. Gordon to the argument of Friedman (1968). In the early 1970s, Gordon opposed the NRH, arguing that the estimated parameter on expected inflation was below one. Confronting to new data and to rising inflation, Gordon adopted the NRH after 1973. Nevertheless, the adoption anticipated any clear empirical proof. We explain that this conversion was due to Friedman’s influence on Gordon, but also to the fact it did not prevent Gordon to support active stabilization policies.

Thomas Sargent face à Robert Lucas : une autre ambition pour la Nouvelle Economie Classique

The article shows that Sargent’s macroeconomic vision differs from Lucas' one. For the latter, the assumptions of a model are “un-realistic”, i.e., the model does not aim to represent reality. It is a simulation tool that allows the assessment of different economic policies. The “Lucasian” ideal is a macroeconomist, who is therefore destined to become an engineer in charge of providing public authorities with an “economic policy software”. The engineer uses this software to guide policymakers on a scientific basis. For its part, Sargent considers that in order to substitute the Keynesian paradigm, the new classical economics must be able to fulfill the same tasks. And one of these tasks is to advise public authorities by providing them with an interpretative framework for the economic and social phenomena and with intuitive tools to discuss the economic policies that will be set up. Sargent wants to apply what he calls the Rational Expectations Theory to a set of concrete events (Poincaré stabilization, German hyperinflation, Thatcher and Reagan policies) in order to demonstrate the relevance of this interpretative framework used to think about contemporary economic problems.

Criticizing the Lucas Critique: Macroeconometricians' Response to Robert Lucas

The purpose of this article is to provide a better explanation of the reactions of the Keynesian macroeconometricians to the Lucas Critique in the years following its publication and, finally, to provide a better explanation of the success of the Lucas Critique. Our explanation will be based on an interpretation of “Econometric Policy Evaluation” both as a positive and as a prescriptive statement. We think that this duality is present as well in Lucas's paper and in the reactions to it. This allows us to better understand why Kenesians did not provide a global, pertinent, convincing response to Lucas, which weakened their position inside the profession.