Modern Monetary Policy Evaluation and the Lucas Critique

Karl-Friedrich Israel

Modern Monetary Policy Evaluation

and the Lucas Critique

19/2015 Abstract -I. Introduction -

Bret-ton Woods System

-General Theory of Em-ployment, Interest, and Money

-1

2

II. A brief Review of Modern Macroeconomics

General Theory

125

Large-Scale Keynesian Macroeconometrics

Econo-metric Society Cowles

Commission for Research in Economics

Grundriss einer Oekonometrie und die auf der der Buchhaltung

General The-ory of Employment, Interest, and Money

5

Gen-eral Theory

The Keynesian Revolution General Theory General Theory Cowles Commission 7 Cowles Commission Economic

127

128

129

A Theory of the Consump-tion FuncConsump-tion

Cowles Commission

The Lucas Critique and New Classical Economics

adaptive12

The Modern Consensus Approach of New Keynesian DSGE Modeling

potential

Problem implied in the Lucas Critique

The Misesian Core of the Lucas Critique

methodological dualism

17

18

A Substantiation of the Misesian View

produces the same effect, and differences in the effects imply different causes

all

19

20

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