This paper tests the fundamental implication of classical stochastic macroeconomic models à la Sargent-Lucas, namely, that conditional means of real variables are invariant with respect to monetary and fiscal policy. Using a multiple-equations technique to examine U.S. data from 1952:II to 1972:III, the classical hypothesis (which includes the natural-rate hypothesis) is rejected. While such evidence does not completely rule out the possibility of classical behavior by the economy, it provides some reassurance for those predisposed toward policy activism.

This paper tests the fundamental implication of classical stochastic macroeconomic models à la Sargent-Lucas, namely, that conditional means of real variables are invariant with respect to monetary and fiscal policy. Using a multiple-equations technique to examine U.S. data from 1952:II to 1972:III, the classical hypothesis (which includes the natural-rate hypothesis) is rejected. While such evidence does not completely rule out the possibility of classical behavior by the economy, it provides some reassurance for those predisposed toward policy activism.

This paper investigates the conjecture that oligopolistic pricing behavior will invalidate the Lucas-Sargent policy-ineffectiveness proposition even if expectations are formed rationally. The procedure is to examine the properties of an analytical macroeconomic model that incorporates a simplified version of the MPS wage-price sector. It is shown that the validity of the conjecture depends upon the precise manner in which lags are built into the price adjustment equation. A crucial condition is isolated and used to motivate an empirical test. The results, based on quarterly U.S. data, are predominantly consistent with the ineffectiveness proposition.

This is a review article based on W. O. Henderson's two-volume Life of Friedrich Engels. After a brief biographical summary, Engels's contributions to political economy are examined, and it is suggested that these are much more important than has so far been recognized (e.g., by Schumpeter). In particular, Engels's paper "Outlines of a Critique of Political Economy" announced several of the basic and least invalid themes of Marxist political economy. Later Engels, when criticizing Utopian socialism, contributed a very remarkable account of the essential functions of the competitive price mechanism.

This is a review article based on W. O. Henderson's two-volume Life of Friedrich Engels. After a brief biographical summary, Engels's contributions to political economy are examined, and it is suggested that these are much more important than has so far been recognized (e.g., by Schumpeter). In particular, Engels's paper "Outlines of a Critique of Political Economy" announced several of the basic and least invalid themes of Marxist political economy. Later Engels, when criticizing Utopian socialism, contributed a very remarkable account of the essential functions of the competitive price mechanism.

This paper considers the validity of the Lucas-Sargent Proposition, which concerns the ineffectiveness of countercyclical monetary policy when expectations are rational, under the assumption that prices are "sticky." The model of Sargent and Wallace is modified so as to incorporate stickiness as follows: in each period the price adjusts to the market-clearing value only if the latter is far from the expected value (i.e., when the cost of maintaining an inappropriate price exceeds the lump-sum cost of a revision). Otherwise the price equals the value previously expected. Given this modification, the proposition remains valid.