The Basic Story of "Modern" Macroeconomics as a Failed Research Program

Paul Krugman:

Learned Helplessness In Macro: the basic story of “modern” macro runs like this:

Lucas and his disciples agree that the economy looks Keynesian — that is, it surely looks as if monetary and fiscal policy have real effects — but argue that an equilibrium approach with imperfect information can explain why, while rejecting Keynesian policy implications. And they ridicule Keynesian economics.

By 1980 — three decades ago! — it is already clear that the Lucas project...