Specify the Lucas Supply Function. What are its implications? In what respects is it different from the classical aggregate supply function?
Introduction The Lucas Supply Function is an important concept in macroeconomics, especially in the New Classical school of thought. Developed by Robert Lucas in the 1970s, it introduced expectations and information into the analysis of aggregate supply. Lucas challenged the traditional Keynesian and classical views by emphasizing the role of rational expectations in shaping output […]