Lucas islands model

"The biggest step I ever made was, I guess, the "Expectations and the Neutrality of Money" paper in 1972, in the sense that this paper was for me and, (I think) for the profession, a big step from what other people had done. The economic logic of it was very much built on Phelps — the parable of an economy of islands — which wasn't my idea at all. But what Phelps got me thinking about was a general equilibrium model in which monetary shocks could induce people to work harder because of lack of information. It was a technically cool paper, it was hard to write, and it put me on the map as a theoretical economist."