Robert Lucas Jr.

Robert Emerson Lucas Jr. (1937-2023) was an American macroeconomist at the University of Chicago and the central architect of new classical macroeconomics. His 1972 paper incorporated the rational expectations hypothesis, that economic agents form forecasts using all available information rather than mechanically extrapolating the past, into a dynamic macroeconomic model, transforming how economists analyze monetary policy and business cycles. The 1976 Lucas critique went further, arguing that a macroeconomic model estimated from past policy regimes cannot reliably predict the effects of a new policy, because rational agents change their own behavior in response to the policy change itself; this challenged the foundations of the large Keynesian econometric models then dominant. He was awarded the Nobel Memorial Prize in Economic Sciences in 1995 for having developed and applied rational expectations.