Criticism
Although, the more long-lasting impact of this paper has been methodological the Lucas island model fails to prove with empirical evidence the right amount of volatility in output fluctuations caused by a combination of monetary shocks and information limitation as is implied. Also, the assumption of information limitation in the Lucas model is sometimes not evident in real life scenarios.On a more empirical level, there is too little research on imperfect information as a source of price rigidity in models with perfectly flexible prices.
Read more about this topic: Lucas Island Model
Famous quotes containing the word criticism:
“It is ... pathetic to observe the complete lack of imagination on the part of certain employers and men and women of the upper-income levels, equally devoid of experience, equally glib with their criticism ... directed against workers, labor leaders, and other villains and personal devils who are the objects of their dart-throwing. Who doesn’t know the wealthy woman who fulminates against the “idle” workers who just won’t get out and hunt jobs?”
—Mary Barnett Gilson (1877–?)
“People try so hard to believe in leaders now, pitifully hard. But we no sooner get a popular reformer or politician or soldier or writer or philosopher—a Roosevelt, a Tolstoy, a Wood, a Shaw, a Nietzsche, than the cross-currents of criticism wash him away. My Lord, no man can stand prominence these days. It’s the surest path to obscurity. People get sick of hearing the same name over and over.”
—F. Scott Fitzgerald (1896–1940)