On top of this came the second strike of the new classicals against the then predominantly Keynesian army of policy-oriented macroeconomists. Lucas argued that the then popular large macroeconometric models (with a strong Keynesian flavour)

are useless for the exact task for which they are being used, namely the evaluation of the effects of different types of economic policy. This so-called Lucas critique can be illustrated with the aid of our model. Suppose that the economy has operated under the policy rule (3.16) for some time, that agents know and understand it, and that the economy is in a stochastic steady state, so that output follows the stochastic process given by (3.21).