Question

Robert Lucas won the Nobel Prize in economics. Go to http:/nobelprize.org/nobel_prizes/economics/ and locate the press release on Robert Lucas. What was his Nobel Prize awarded for? When was it awarded?

Short answer

R.L. received the Nobel Prize for Literature in 1995. The Nobel Prize was given to R.L. because he formulated and applied the rational expectations theory.

Step-by-step solution

Step 1. Concept of  Rational expectation

Rational expectation refers to the concept in economics which states that the current expectations in an People's perceptions about future economic situations influence and shape the economy.. It states that the expectation of the people changes with the change in the available information and the past data.

Step 2. Explanation

In $1995$ , R.L. The Nobel Prize in Physics was awarded to him. The Nobel Prize was given to R.L. for developing and applying the rational expectations hypothesis. On the basis of historical facts, he modernized macroeconomics by claiming that people's expectations are unpredictable. Through advances in rational expectation theory and more relevant monetary policy, he improved macroeconomic understanding.

As a result of his efforts in $1995$ , the RL received a Noble Prize.