Lucas Critique After the Crisis

a Historicization and Review of one Theory’s Eminence

Abstract

This paper re-examines the Lucas Critique (LC) in light of the 2008 financial crisis and recent scholarship. Inspired by the theoretical reassessments of the Lucas Critique by
economists (Anwar Shaikh) and historians (Daniel T. Rodgers), this paper takes on two separate tasks: 1) to understand the historical context that gave rise to Robert Lucas’
infamous 1976 paper now commonly called the ‘Lucas Critique’, and 2) to examine relevant literature (as it addresses issues of theory, policy, and statistical techniques) since
the recent US financial crisis to find out if the Lucas Critique has been subject to greater scrutiny in the economics discipline. Using the SSRN database, this paper concludes that
little has changed in the perception of the Lucas Critique since 2008; however, a large quantity of associations with the theory that diverge from the content of the paper itself
makes clear the need for another project to contextualize the Lucas Critique since its publication (not simply up to its publication, which is performed here).