Oh dear, oh dear, Robert Lucas is talking nonsense – again30 November, 2012 at 13:17 | Posted in Economics | 7 Comments
In a recent interview Robert Lucas says he “now believe that the evidence on postwar recessions … overwhelmingly supports the dominant importance of real shocks.”
So, according to Lucas, changes in tastes and technologies should be able to explain the main fluctuations in e.g. unemployment that we have seen during the last six or seven decades.
Let’s look at the facts and see if there is any strong evidence for this allegation. Just to take a couple of examples, let’s look at Sweden and Portugal:
and at the situation in the eurozone:
What shocks to tastes and technologies drove the unemployment rate up and down like this in these countries? Not even a Nobel laureate could in his wildest imagination come up with any warranted and justified explanation solely based on changes in tastes and technologies. Lucas is just making himself ridiculous.