Lucas defends economics

A follow up in this week's economist, by Nobel winner Robert Lucas, to the articles a couple of weeks ago about the state of economics (see earlier posting). Lucas makes some good points in defense of economics and macroeconomics in particular. He points out that the efficient markets hypothesis merely says that people make the most efficient possible use of the information available to them - this does not per se rule out bubbles (or other inefficiencies at the aggregate level) because no one knows when or if a bubble will burst. He also argues that the rapid and apparently successful response of policy in the US to the crisis was informed by recent macroeconomic research.