The Economics Book

IN CONTEXT

FOCUS

The macroeconomy

KEY THINKERS

John Muth (1930–2005)

Robert Lucas (1937–)

BEFORE

1939 British economist John Hicks analyzes the way that expectations of the future change.

1956 US economist Philip Cagan uses “adaptive expectations” to explain forecasts based on the past.

AFTER

1985 US economist Gregory Mankiw contributes to the emergence of the “New Keynesian” economics, which uses new models that incorporate people’s rational expectations of the future into their calculations.

The rise of government intervention and spending after World War II provided an important new way for economists to think about the whole economy. In particular they ...