Monetary non-neutrality and stabilisation policies 50 years after Lucas’s “expectations” paper: a roundtable discussion

Abstract

Half a century has passed since Robert Lucas got his paper on expectations and the neutrality of money published in the Journal of Economic Theory. That article is widely considered as pathbreaking, starting a movement that changed the professional standards of doing macroeconomics. It arguably also affected the perception, if not the conduct of monetary policy and other stabilisation policies. This roundtable discussion collects comments from a panel of experts in a combination of prominent macroeconomists who have gathered ample experience of work in central banks and other authorities, and historians of economic thought.

Keywords:

• Robert E. Lucas
• methodology
• neutrality of money
• monetary policy

JEL CODES:

• B41
• D50
• E52

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 FMP stands for Fed-MIT-Penn. It was developed in the 1960s by a team of academic and Fed economists led by Franco Modigliani and Albert Ando.

2 Interview with the author, June 2018. Rolnick entered the Fed of Minneapolis, stayed there for his entire career and became its long-standing Director of Research between 1985 and 2010.

3 This story is narrated in Cherrier and Saïdi (2018; Lucas 1983).

4 Additional detail and references can be found here: https://voxeu.org/article/how-ecb-planted-seeds-euro-area-crisis.