ABSTRACT
Robert Lucas is known for developing the new classical or rational expectations approach to macroeconomics. This approach seeks to provide microfoundations to macroeconomics, or make macroeconomics consistent with microeconomics. It assumes that macroeconomic actors, like microeconomic actors, are rational and self-interested human beings who use all available information when making decisions and who seek to anticipate the future consequences of their actions. Keynesian economics can be soundly rejected when macroeconomic actors are viewed in this light — unemployment will remedy itself and stabilization policy is neither necessary nor desirable.
