Wikipedia:
Lucas critique
From Wikipedia, the free encyclopedia
The Lucas critique, named for Robert Lucas's work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data.
From Wikipedia, the free encyclopedia
The Lucas critique, named for Robert Lucas's work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data.
... it is naive to try to predict the effects of a change in economic policy ...
Predict the effects?
It is naive to try to predict the effects? Let's not worry about predicting the effects of policy. Let's worry first about figuring out which direction policy should go. Historical data, especially highly aggregated historical data, is extremely well-suited to that task.
Should we, for example, further encourage the use of credit in the private sector? Historical data, especially highly aggregated historical data, can provide an answer.
The answer is: no.
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