Some Macroeconomics For The 21st Century Summary

Robert E. Lucas Jr.’s journal article, “Some Macroeconomics for the 21st Century” in the Journal of Economic Perspectives, uses both his own and other economist’s models to track and predict economic industrialization and growth by per capita income. Using models of growth on a country wide basis, Lucas is able to track the rate at which nations become industrialized, and the growth rate of the average income once industrialization has taken place. In doing so, he has come to the conclusion that the average rate of growth among industrialized nations is around 2% for the last 30 years, but is higher the closer the nation is to the point in time that it first industrialized. This conclusion is supported by his models, and is a generally accepted idea. Lucas goes on to say that the farther we get from the industrial revolution the average growth rate is more likely to hit 1.5% as a greater percentage of countries become industrialized. To create a model as broad as

He asserts that prior to the industrial revolution, average income did not grow in real terms, and the standard of living was not really changed up until then. After the industrial revolution, entire nations began to grow their economies and increase the standard of living not just for the super rich, historically ‘landed’, elite, but instead for everyone. Although this sounds like a great thing, Lucas adds that it also increase inequality to levels greater than ever before. He ends with the prediction that the world income in real dollars will grow at a steady rate of 1.5%, but with that inequality will also rise. On the contrary, the model he created seems to be almost too linear. There does not seem to be much variation in his graphs, only steady rise over a period of 200 years. Lucas’ model works well for tracking the past, but it is not a good tool for predicting the