I put forth a way out of a dilemma due to the debate of Lucas(1976)-Hoover(1990, 2001) and LeRoy(1995a, 1995b) on whether the theory of macroecometics founded on Lucas critique is tenable as casual model. While considering the probabilistic theory of causality and theories of casual model such as structural equation model, I show that the two opposite viewpoints are logically compatible. First, I introduce the dilemma on whether economic policy reflecting rational expectation of private economic agents should be held fixed either as parameters advocated by Lucas and Hoover or as variables advocated by LeRoy. Second, I show how the two opposite viewpoints of Lucas-Hoover and LeRoy are logically compatible in terms of both causal interaction and counterfactual factors elaborated in the probabilistic theory of causality and moderate variable elaborated in the theories of casual model.
I put forth a way out of a dilemma due to the debate of Lucas(1976)-Hoover(1990, 2001) and LeRoy(1995a, 1995b) on whether the theory of macroecometics founded on Lucas critique is tenable as casual model. While considering the probabilistic theory of causality and theories of casual model such as structural equation model, I show that the two opposite viewpoints are logically compatible. First, I introduce the dilemma on whether economic policy reflecting rational expectation of private economic agents should be held fixed either as parameters advocated by Lucas and Hoover or as variables advocated by LeRoy. Second, I show how the two opposite viewpoints of Lucas-Hoover and LeRoy are logically compatible in terms of both causal interaction and counterfactual factors elaborated in the probabilistic theory of causality and moderate variable elaborated in the theories of casual model.
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