Question

In the novel how the markets fail by John Cassidy, What was Lucas’ view on math in economics?

Answer 1

We know that the book how markets fail: The logic of Economic calamities written by John Cassidy. In this book, the Lucas idea is based on how the economy works. According to Lucas the unemployment is related to Inflation which is also linked interest rate. In this context they all have the same mathematical model of the economy in their heads, which is also use to form expectations of wages, prices and other variables. This model is simply known as rational expectation hypothesis. Based on this model Lucas write a few mathematical equation, which describe how workers. Firm and government behave. He put mathematical expectation operator in front of this expectation.