Hardback
THE NEW CLASSICAL MACROECONOMICS
Over the past two decades the new classical macroeconomics has become the single most coherent school of macroeconomic thought. Always controversial, it has nonetheless captured centre-stage, and has become the standard by which competing schools of thought are judged. These volumes contain the most important and influential articles of the new classical school, as well as some important articles critical of new classical thinking. The volumes are arranged thematically, beginning with the rational expectations hypothesis and the application of general equilibrium to labour markets, and continuing with various new classical arguments for the ineffectiveness of government policy. The core of the volumes is Lucas’s famous critique of econometric policy
More Information
Critical Acclaim
Contributors
Contents
More Information
Over the past two decades the new classical macroeconomics has become the single most coherent school of macroeconomic thought. Always controversial, it has nonetheless captured centre-stage, and has become the standard by which competing schools of thought are judged. These volumes contain the most important and influential articles of the new classical school, as well as some important articles critical of new classical thinking. The volumes are arranged thematically, beginning with the rational expectations hypothesis and the application of general equilibrium to labour markets, and continuing with various new classical arguments for the ineffectiveness of government policy. The core of the volumes is Lucas’s famous critique of econometric policy evaluation and responses to it in the areas of econometric technique, monetary theory and business-cycle theory. The final section covers the rapidly developing area of models of growth with increasing returns.
Critical Acclaim
‘The choice of articles by Kevin Hoover is most judicious. . . . a valuable source that can save on photocopying expenses and time.’
– Huw David Dixon, The Economic Journal
– Huw David Dixon, The Economic Journal
Contributors
Contributors: R.J. Barro, D.F. Hendry, F.E. Kydland, R.E. Lucas, Jr., E.C. Prescott, P.M. Romer, T.J. Sargent
Contents
CONTENTS
VOLUME I
PART I: Rational Expectations
J. F. Muth (1961), ‘Rational Expectations and the Theory of Price Movements’
M. Bray (1982), ‘Learning, Estimation and the Stability of Rational Expectations’
M. C. Lovell (1986), ‘Tests of the Rational Expectations Hypothesis’
R. E. Lucas, Jr. (1986), ‘Adaptive Behavior and Economic Theory’
PART II: The Phillips Curve and Labor Markets
R. E. Lucas, Jr. and L. A. Rapping (1969), ‘Real Wages, Employment and Inflation’
R. E. Lucas, Jr. (1972), ‘Econometric Testing of the Natural Rate Hypothesis’
R. E. Lucas, Jr. (1972), ‘Expectations and the Neutrality of Money’
R. E. Lucas, Jr. (1973), ‘Some International Evidence on Output-inflation Tradeoffs’
R. T. Froyen and R. N. Waud (1980), ‘Further International Evidence on Output-inflation Tradeoffs’
R. J. Barro (1977), ‘Unanticipated Money Growth and Unemployment in the United States’
D. A. Small (1979), ‘Unanticipated Money Growth and Unemployment in the United States: Comment’
R. J. Barro and Z. Hercowtz (1980), ‘Money Stock Revisions and Unanticipated Money Growth’
R. J. Barro and M. Rush (1980), ‘Unanticipated Money and Economic Activity’
R. E. Lucas, Jr. (1980), ‘Two Illustrations of the Quantity Theory of Money’
PART III: The Limits of Monetary and Fiscal Policy
T. J. Sargent and N. Wallace (1976), ‘Rational Expectations and the Theory of Economic Policy’
E. S. Phelps and J. B. Taylor (1977), ‘Stabilizing Powers of Monetary Policy under Rational Expectations’
J. B. Taylor (1979), ‘Staggered Wage Setting in a Macro Model’
T. J. Sargent and N. Wallace (1981), ‘Some Unpleasant Monetarist Arithmetic’
M. Darby (1984), ‘Some Pleasant Monetarist Arithmetic’
T. J. Sargent and P. Miller (1984), ‘A Reply to Darby’
P. J. Miller (1983), ‘Higher Deficit Policies Lead to Higher Inflation’
R. E. Lucas, Jr. (1986), ‘Principles of Fiscal and Monetary Policy’
R. J. Barro (1974), ‘Are Government Bonds Net Wealth?’
J. M. Buchanan (1974), ‘Barro on the Ricardian Equivalence Theorem’
G. P. O’Driscoll (1977), ‘The Ricardian Nonequivalence Theorem’
D. B. Bernheim and K. Bagwell (1988), ‘Is Everything Neutral?’
R. J. Barro (1979), ‘On the Determination of Public Debt’
N. Wallace (1981), ‘A Modigliani-Miller Theorem for Open-Market Operations’
T. J. Sargent and B. D. Smith (1987), ‘Irrelevance of Open Market Operations in Some Economies with Government Currency Being Dominated in Rate of Return’
F. E. Kydland and E. C. Prescott (1977), ‘Rules Rather than Discretion: The Inconsistency of Optimal Plans’
R. J. Barro and D. B. Gordon (1983), ‘A Positive Theory of Monetary Policy in a Natural Rate Model’
R. J. Barro and D. B. Gordon (1983), ‘Rules, Discretion and Reputation in a Model of Monetary Policy’
S. Goldfeld (1982), ‘Rules, Discretion and Reality’
D. Backus and J. Driffill (1985), ‘Inflation and Reputation’
D. Backus and J. Driffill (1985), ‘Rational Expectations and Policy Credibility Following A Change in Regime’
VOLUME II
PART I: The Lucas Critique
R. E. Lucas, Jr. (1976), ‘Econometric Policy Evaluation: A Critique’
O. J. Blanchard (1987), ‘The Lucas Critique and the Volcker Deflation’
T. F. Cooley, S. F. LeRoy and N. Raymon (1984), ‘Econometric Policy Evaluation: A Note’
D. F. Hendry (1988), ‘The Encompassing Implications of Feedback versus Feedforward Mechanisms in Econometrics’
PART II: Structural Estimation
T. J. Sargent (1981), ‘Interpreting Economic Time Series’
L. P. Hansen and K. J. Singleton (1982), ‘Generalized Methods of Moments Estimators’
L. P. Hansen and K. J. Singleton (1982), ‘Generalized Instrumental Variables Estimation of Nonlinear Rational Expectations Models’
PART III: The VAR Programme
C. A. Sims (1972), ‘Money, Income and Causality’
C. A. Sims (1980), ‘Macroeconomics and Reality’
C. A. Sims (1982), ‘Policy Analysis with Econometric Models’
T. F. Cooley and S. F. LeRoy (1985), ‘Atheoretical Macroeconomics: A Critique’
E. E. Leamer (1985), ‘Vector Autoregressions for Causal Inference?’
T. J. Sargent (1984), ‘Autoregressions, Expectations and Policy Advice’
R. B. Litterman and I. Weiss (1985), ‘Money, Real Interest Rates and Output: A Reinterpretation of Postwar U. S. Data’
C. A. Sims (1986), ‘Are Forecasting Models Usable for Policy Analysis?’
PART IV: Overlapping-generations Models of Money
N. Wallace (1980), ‘The Overlapping Generations Model of Fiat Money’
J. Bryant and N. Wallace (1979), ‘The Inefficiency of Interest-Bearing National Debt’
J. Bryant and N. Wallace (1984), ‘A Price Discrimination Analysis of Monetary Policy’;
T. J. Sargent and N. Wallace (1982), ‘The Real-bills Doctrine versus the Quantity Theory: A Reconsideration’
D. Laidler (1984), ‘Misconceptions about the Real-bills Doctrine: A Comment on Sargent and Wallace’
B. T. McCallum (1983), ‘The Role of Overlapping-Generations Models in Monetary Economics’
VOLUME III
PART I: Finance-based Models of Money
F. Black (1970), ‘Banking and Interest Rates in a World Without Money’
E. Farna (1980), ‘Banking in the Theory of Finance’
B. T. McCallum (1985), ‘Bank Deregulation, Accounting Systems of Exchange and the Unit of Account: A Critical Review’
L. H. White (1984), ‘Competitive Payments Systems and the Unit of Account’
K. D. Hoover (1988) ‘Money, Prices and Finance in the New Monetary Economics’
R. E. Lucas, Jr. (1978), ‘Asset Prices in an Exchange Economy’
R. E. Lucas, Jr. (1980), ‘Equilibrium in a Pure Currency Economy’
R. E. Lucas, Jr. (1984), ‘Money in a Theory of Finance’
R. E. Lucas, Jr., and N. L. Stokey (1987), ‘Money and Interest in a Cash-in-Advance Economy’
PART II: Business-cycle Models
R. E. Lucas, Jr. (1975), ‘An Equilibrium Model of the Business Cycle’
R. E. Lucas, Jr. (1980), ‘Methods and Problems in Business Cycle Theory’
R. E. Lucas, Jr. (1977), ‘Understanding Business Cycles’
F. E. Kydland and E. C. Prescott (1982), ‘Time to Build and Aggregate Fluctuations’
J. B. Long, Jr. and C. I. Plosser (1983), ‘Real Business Cycles’
S. Altug (1989), ‘Time-to-Build and Aggregate Fluctuations: Some New Evidence’
R. G. King and C. I. Plosser (1984), ‘Money, Credit and Prices in a Real Business Cycle’
E. C. Prescott (1986), ‘Theory Ahead of Business Cycle Measurement’
L. H. Summers (1986), ‘Some Skeptical Observations on Real Business Cycle Theory’
E. C. Prescott (1986), ‘Response to a Skeptic’
R. D. Rogerson (1988), ‘Indivisible Labor, Lotteries and Equilibrium’
G. D. Hansen (1985), ‘Indivisible Labor and the Business Cycle’
B. T. McCallum (1986), ‘On ‘real’ and ‘sticky-price’ theories of the Business Cycle’
M. Eichenbaum and K. J. Singleton (1986), ‘Do Equilibrium Real Business Cycle Theories Explain Postwar U. S. Business Cycles?’
F. E. Kydland and E. C. Prescott (1988), ‘The Workweek of Capital and Its Cyclical Implications’
F. E. Kydland and E. C. Prescott (1990), ‘Business Cycles: Real Facts and a Monetary Myth’
P. M. Romer (1986), ‘Increasing Returns and Long-Run Growth’
P. M. Romer (1987), ‘Growth Based on Increasing Returns Due to Specialization’
R. E. Lucas, Jr. (1988), ‘On the Mechanics of Economic Development’
R. G. King et al (1988), ‘Production, Growth and Business Cycles: II. New Directions’
P. M. Romer (1990), ‘Endogeneous Technical Change’
VOLUME I
PART I: Rational Expectations
J. F. Muth (1961), ‘Rational Expectations and the Theory of Price Movements’
M. Bray (1982), ‘Learning, Estimation and the Stability of Rational Expectations’
M. C. Lovell (1986), ‘Tests of the Rational Expectations Hypothesis’
R. E. Lucas, Jr. (1986), ‘Adaptive Behavior and Economic Theory’
PART II: The Phillips Curve and Labor Markets
R. E. Lucas, Jr. and L. A. Rapping (1969), ‘Real Wages, Employment and Inflation’
R. E. Lucas, Jr. (1972), ‘Econometric Testing of the Natural Rate Hypothesis’
R. E. Lucas, Jr. (1972), ‘Expectations and the Neutrality of Money’
R. E. Lucas, Jr. (1973), ‘Some International Evidence on Output-inflation Tradeoffs’
R. T. Froyen and R. N. Waud (1980), ‘Further International Evidence on Output-inflation Tradeoffs’
R. J. Barro (1977), ‘Unanticipated Money Growth and Unemployment in the United States’
D. A. Small (1979), ‘Unanticipated Money Growth and Unemployment in the United States: Comment’
R. J. Barro and Z. Hercowtz (1980), ‘Money Stock Revisions and Unanticipated Money Growth’
R. J. Barro and M. Rush (1980), ‘Unanticipated Money and Economic Activity’
R. E. Lucas, Jr. (1980), ‘Two Illustrations of the Quantity Theory of Money’
PART III: The Limits of Monetary and Fiscal Policy
T. J. Sargent and N. Wallace (1976), ‘Rational Expectations and the Theory of Economic Policy’
E. S. Phelps and J. B. Taylor (1977), ‘Stabilizing Powers of Monetary Policy under Rational Expectations’
J. B. Taylor (1979), ‘Staggered Wage Setting in a Macro Model’
T. J. Sargent and N. Wallace (1981), ‘Some Unpleasant Monetarist Arithmetic’
M. Darby (1984), ‘Some Pleasant Monetarist Arithmetic’
T. J. Sargent and P. Miller (1984), ‘A Reply to Darby’
P. J. Miller (1983), ‘Higher Deficit Policies Lead to Higher Inflation’
R. E. Lucas, Jr. (1986), ‘Principles of Fiscal and Monetary Policy’
R. J. Barro (1974), ‘Are Government Bonds Net Wealth?’
J. M. Buchanan (1974), ‘Barro on the Ricardian Equivalence Theorem’
G. P. O’Driscoll (1977), ‘The Ricardian Nonequivalence Theorem’
D. B. Bernheim and K. Bagwell (1988), ‘Is Everything Neutral?’
R. J. Barro (1979), ‘On the Determination of Public Debt’
N. Wallace (1981), ‘A Modigliani-Miller Theorem for Open-Market Operations’
T. J. Sargent and B. D. Smith (1987), ‘Irrelevance of Open Market Operations in Some Economies with Government Currency Being Dominated in Rate of Return’
F. E. Kydland and E. C. Prescott (1977), ‘Rules Rather than Discretion: The Inconsistency of Optimal Plans’
R. J. Barro and D. B. Gordon (1983), ‘A Positive Theory of Monetary Policy in a Natural Rate Model’
R. J. Barro and D. B. Gordon (1983), ‘Rules, Discretion and Reputation in a Model of Monetary Policy’
S. Goldfeld (1982), ‘Rules, Discretion and Reality’
D. Backus and J. Driffill (1985), ‘Inflation and Reputation’
D. Backus and J. Driffill (1985), ‘Rational Expectations and Policy Credibility Following A Change in Regime’
VOLUME II
PART I: The Lucas Critique
R. E. Lucas, Jr. (1976), ‘Econometric Policy Evaluation: A Critique’
O. J. Blanchard (1987), ‘The Lucas Critique and the Volcker Deflation’
T. F. Cooley, S. F. LeRoy and N. Raymon (1984), ‘Econometric Policy Evaluation: A Note’
D. F. Hendry (1988), ‘The Encompassing Implications of Feedback versus Feedforward Mechanisms in Econometrics’
PART II: Structural Estimation
T. J. Sargent (1981), ‘Interpreting Economic Time Series’
L. P. Hansen and K. J. Singleton (1982), ‘Generalized Methods of Moments Estimators’
L. P. Hansen and K. J. Singleton (1982), ‘Generalized Instrumental Variables Estimation of Nonlinear Rational Expectations Models’
PART III: The VAR Programme
C. A. Sims (1972), ‘Money, Income and Causality’
C. A. Sims (1980), ‘Macroeconomics and Reality’
C. A. Sims (1982), ‘Policy Analysis with Econometric Models’
T. F. Cooley and S. F. LeRoy (1985), ‘Atheoretical Macroeconomics: A Critique’
E. E. Leamer (1985), ‘Vector Autoregressions for Causal Inference?’
T. J. Sargent (1984), ‘Autoregressions, Expectations and Policy Advice’
R. B. Litterman and I. Weiss (1985), ‘Money, Real Interest Rates and Output: A Reinterpretation of Postwar U. S. Data’
C. A. Sims (1986), ‘Are Forecasting Models Usable for Policy Analysis?’
PART IV: Overlapping-generations Models of Money
N. Wallace (1980), ‘The Overlapping Generations Model of Fiat Money’
J. Bryant and N. Wallace (1979), ‘The Inefficiency of Interest-Bearing National Debt’
J. Bryant and N. Wallace (1984), ‘A Price Discrimination Analysis of Monetary Policy’;
T. J. Sargent and N. Wallace (1982), ‘The Real-bills Doctrine versus the Quantity Theory: A Reconsideration’
D. Laidler (1984), ‘Misconceptions about the Real-bills Doctrine: A Comment on Sargent and Wallace’
B. T. McCallum (1983), ‘The Role of Overlapping-Generations Models in Monetary Economics’
VOLUME III
PART I: Finance-based Models of Money
F. Black (1970), ‘Banking and Interest Rates in a World Without Money’
E. Farna (1980), ‘Banking in the Theory of Finance’
B. T. McCallum (1985), ‘Bank Deregulation, Accounting Systems of Exchange and the Unit of Account: A Critical Review’
L. H. White (1984), ‘Competitive Payments Systems and the Unit of Account’
K. D. Hoover (1988) ‘Money, Prices and Finance in the New Monetary Economics’
R. E. Lucas, Jr. (1978), ‘Asset Prices in an Exchange Economy’
R. E. Lucas, Jr. (1980), ‘Equilibrium in a Pure Currency Economy’
R. E. Lucas, Jr. (1984), ‘Money in a Theory of Finance’
R. E. Lucas, Jr., and N. L. Stokey (1987), ‘Money and Interest in a Cash-in-Advance Economy’
PART II: Business-cycle Models
R. E. Lucas, Jr. (1975), ‘An Equilibrium Model of the Business Cycle’
R. E. Lucas, Jr. (1980), ‘Methods and Problems in Business Cycle Theory’
R. E. Lucas, Jr. (1977), ‘Understanding Business Cycles’
F. E. Kydland and E. C. Prescott (1982), ‘Time to Build and Aggregate Fluctuations’
J. B. Long, Jr. and C. I. Plosser (1983), ‘Real Business Cycles’
S. Altug (1989), ‘Time-to-Build and Aggregate Fluctuations: Some New Evidence’
R. G. King and C. I. Plosser (1984), ‘Money, Credit and Prices in a Real Business Cycle’
E. C. Prescott (1986), ‘Theory Ahead of Business Cycle Measurement’
L. H. Summers (1986), ‘Some Skeptical Observations on Real Business Cycle Theory’
E. C. Prescott (1986), ‘Response to a Skeptic’
R. D. Rogerson (1988), ‘Indivisible Labor, Lotteries and Equilibrium’
G. D. Hansen (1985), ‘Indivisible Labor and the Business Cycle’
B. T. McCallum (1986), ‘On ‘real’ and ‘sticky-price’ theories of the Business Cycle’
M. Eichenbaum and K. J. Singleton (1986), ‘Do Equilibrium Real Business Cycle Theories Explain Postwar U. S. Business Cycles?’
F. E. Kydland and E. C. Prescott (1988), ‘The Workweek of Capital and Its Cyclical Implications’
F. E. Kydland and E. C. Prescott (1990), ‘Business Cycles: Real Facts and a Monetary Myth’
P. M. Romer (1986), ‘Increasing Returns and Long-Run Growth’
P. M. Romer (1987), ‘Growth Based on Increasing Returns Due to Specialization’
R. E. Lucas, Jr. (1988), ‘On the Mechanics of Economic Development’
R. G. King et al (1988), ‘Production, Growth and Business Cycles: II. New Directions’
P. M. Romer (1990), ‘Endogeneous Technical Change’
