Critique and consequence

Thomas J. Sargent

    Research output: Contribution to journalArticlepeer-review


    After describing the landscape in macroeconomics and econometrics in Spring 1973 when Robert E. Lucas (1976) first presented his Critique at the inaugural Carnegie-Rochester conference, I add a fourth example based on Sargent and Wallace (1973) to those in section 5 of Lucas's paper. To portray consequences of Lucas's Critique, I use it as a vehicle to describe the time inconsistency of optimal plans and their credibility. A theory of government policy affects chains of influence among money creation and inflation rates at different dates. Different theories of policy bring different state vectors in recursive representations of inflation-money-supply outcomes.

    Original languageEnglish (US)
    Pages (from-to)2-13
    Number of pages12
    JournalJournal of Monetary Economics
    StatePublished - Jan 2024


    • Cross-equation restrictions
    • Dynamic programming squared
    • Rational expectations
    • Time-inconsistency

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics


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