Introduction: Seven Decades of the IS-LMModel

For some twenty-five years after the end of World War II, the IS-LM model dominated macroeconomics. With the advent of the new classical macroeconomics in the early 1970s, that dominance was at first challenged and then broken. Yet the IS-LM model lives on. While no longer central to the graduate training of most macroeconomists or to cutting-edge macroeconomic research, the IS-LM model continues to be a mainstay of undergraduate textbooks, finds wide application in areas of applied macroeconomics away from the front lines of macroeconomic theory, and lies at the conceptual core of most government and commercial macroeconometric models. What explains the rise, the fall, and the persistence of the IS-LM model? This volume presents essays from the HOPE conference held 25–27 April 2003 at Duke University that provide partial answers to this question. In addition to the ten essays from the conference, we are fortunate to be able to reprint an address delivered by Robert Lucas in conjunction with the conference. Professor Lucas made his remarks at a reception celebrating the commitment of his professional papers to Duke University’s Rare Book, Manuscript, and Special Collections Library, where they will be housed with the papers of other distinguished economists received through the Economists’ Papers Project. As Lucas is one of the central players in the intellectual movement that ultimately dethroned the IS-LMmodel, his lecture stands