Early in his career, this economist worked at Carnegie Mellon with Leonard Rapping to create a model which attempted toexplain the so-called "money illusion" in labor supply.
Early in his career, this economist worked at Carnegie Mellon with Leonard Rapping to create a model which attempted toexplain the so-called "money illusion" in labor supply. He used Edmund Phelps' island parable in his paper on the "Neutralityof Money" to model the relationship between money supply and changes in output in a simplifiÂed economy. In the title ofanother paper, he asked "Why Doesn't Capital Flow from Rich to Poor Countries?," a question that's known as his paradoxor puzzle. He showed that the predicted relation in the Phillips Curve cannot be used to forecast the effect of new monetarypolicies, because macroeconomic models do not adjust to the changing behavior of agents which accompany changes in economicpolicy. That result is his namesake "Critique" of macroeconomics. For 10 points, name this member of the ChicagoSchool who extended John Muth's hypothesis of rational expectations.
Early in his career, this economist worked at Carnegie Mellon with Leonard Rapping to create a model which attempted toexplain the so-called "money illusion" in labor supply.
Robert Emerson Lucas, Jr.