Talk:New Keynesian economics

former copyright violation

There used to be a copyright violation on this page; after it had been noted, someone replaced it with the stub that now fills the page. I deleted the page to get the copyright violation out of the history, then re-created the page with the stub. Andre Engels

Paul Davidson

I think the link to Paul Davidsion in the "Relation to other macroeconomic schools" can't be right. This guy has nothing to with economics what so ever and on the Post-Keynesian_economics page the link is red as well. --58.105.106.2 23:56, 13 November 2007 (UTC)

Thanks! Here is the right link: Paul Davidson (economist). Rinconsoleao 10:36, 14 November 2007 (UTC)

op. cit.

The Wikipedia Manual of Style advises against abbreviations like op. cit., suggesting "named references" instead. However, the Manual of Style also advocates using the most specific reference possible: references to a specific page or specific chapter instead of a whole work. Unfortunately, as far as I know there is no way to use a single named reference to refer repeatedly to different chapters or pages of the same work. Therefore I have used op. cit. instead of "named references". But if someone else knows a better way of dealing with this, please go ahead. --Rinconsoleao (talk) 12:11, 23 January 2009 (UTC)

Sorry, this is in the wrong section, but I don't know how to start a new one. The problem is that in the section Microfoundations of price stickiness, second paragraph, there is a mention to Ball and Romer, but no link or reference is provided. Does anyone know which work is being mentioned, and if yes, could you provide the link or reference? —Preceding unsigned comment added by Viviannevilar (talk • contribs) 21:45, 8 August 2009 (UTC)

The reference is likely to:

• Ball, Laurence & Romer, David, 1991. "Sticky Prices as Coordination Failure," American Economic Review, American Economic Association, vol. 81(3), pages 539-52, June.

Or perhaps,

• Ball, L., and D. Romer (1990): “Real Rigidities and the Nonneutrality of Money,” Review of Economic Studies, 57(April), 539–552.

LK (talk) 07:56, 9 August 2009 (UTC)

merge with neo-Keynesian

• Disagree Not a good idea IMHO. Neo-Keynesian has a number of connotations, being used in the early days to describe both the neoclassical synthesis and post Keynesian economics, which could not be more different! New Keynesian is pretty well established now. Simem007 (talk) 19:30, 12 April 2009 (UTC)

• Disagree Merge tag should be removed. Both articles need work, but the terms 'New Keynesian' and 'Neo-Keynesian' refer to distinctly different things. The former refers to a school of thought based on Mankiw and Romer's work done in the 90's, the later to schools of thought that developed in the 1960's.LK (talk) 03:06, 13 April 2009 (UTC)

• Disagree Different schools of thought, both theoretically and historically. Seems silly that this keeps getting suggested for merging. Claphands (talk) 00:00, 21 April 2009 (UTC)

Seems consensus is to NOT merge. I'll remove the tags in a few days unless someone objects. LK (talk) 04:06, 21 April 2009 (UTC)

Tags removed. LK (talk) 08:45, 23 April 2009 (UTC)

Is Paul Krugman really a New Keynesian economist?

Paul Krugmam is mostly an international trade economist and doesn't really seem to be involved in the New Keynesian "movement." From this article in the New York times, he also seems very critical of rational expectations and New Keynesian theory.

http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=1&_r=1

Doktorsleepless (talk) 22:04, 16 May 2010 (UTC)

His textbook and writings are consistently in the New Keynesian tradition. His essays on currency crisis, liquidity traps and Japan's 'Lost Decade' are a large contribution to the literature, and are well known among New Keynesians. He has also described himself as such. LK (talk) 10:48, 17 May 2010 (UTC)

His textbook and policy advocacy are Keynesian, broadly speaking. But his research contributions are not particularly Keynesian. In terms of research, he would best be classified as a New Trade theorist, along with Marc Melitz, who is also mistakenly (in my opinion) on the New Keynesian list. Since most mainstream economists use (new) Keynesian ideas when they are discussing macroeconomic policy issues, it seems silly to me to classify them all as New Keynesians. The list of New Keynesians should be limited to the people who have made important theoretical or empirical contributions to New Keynesian economics. Here is a list: Template_talk:Keynesians with discussion of who should be included, and why. Rinconsoleao (talk) 13:37, 17 May 2010 (UTC)

Origins

This section really needs to be expanded. There is 30 years of New Keynesian writing. Some of the history appears on other pages. For example menu costs is pretty well covered. However, there is currently no page on the Taylor model or the Calvo model. These should either be separate subsections on the sticky (economics) page or perhaps here, or even have their own page(s). I will eventually get round to this, but if anyone else has the time, please go ahead...Byronmercury (talk) 14:12, 4 June 2012 (UTC)

Monetary policy

The lede currently states "Therefore, New Keynesians argue that macroeconomic stabilization by the government (using fiscal policy) or by the central bank (using monetary policy) can lead to a more efficient macroeconomic outcome than a laissez faire policy would."

I was under the impression that New Keynesians were not particularly in favor of using monetary policy as stimulus (eg. QE3), favoring fiscal policy. Should this be changed?173.70.180.143 (talk) 09:04, 27 September 2012 (UTC)

I think that your point is correct in the post crisis period. The quote refers to new Keynesian perspective in the great moderation prior to 2008! Really, the article is incomplete and should have a "new keynesian thought after the 2008 Crisis" or something like that.Byronmercury (talk) 15:00, 26 November 2012 (UTC)

Update

Since my 2012 comment (above) I have done an update of the page. I have taken some material from the History of macroeconomic thought, History of economic thought and some textbook stuff. I moved some of the existing page to the menu cost page (Golosov and Lucas) and deleted the section of micro foundations of price stickiness (since we have a pretty detailed sticky prices page). Apologies for any existing imperfections: any help and advice welcome! It still needs some work (post crisis stuff, criticism of DGSE models etc.)Byronmercury (talk) 15:11, 18 August 2015 (UTC)

Dr. Mihailov's comment on this article

Dr. Mihailov has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

(1) A paragraph could be added at the end of the "Taylor Rule" section, saying something like: "More recent versions of the original Taylor rule, sometimes referred to as Taylor-type (interest-rate) rules, have included various other terms and modifications. The most common among these are: a response to expected inflation, i.e., to the inflation forecast (usually, just one period ahead), rather than to current-period inflation, since monetary policy actions take effect in the economy with a variable lag (estimated to be of about half a year to a year and half); and/or a response to output growth ("speed-limit" rules - see Walsh, C. (2003), "Speed limit policies: the output gap and optimal monetary policy", American Economic Review, 93, 265-278) and/or to the past (usually, last-period) interest rate ("interest rate smoothing" - see Woodford, M. (2003), "Optimal interest-rate smoothing", Review of Economic Studies, 70, 861-886) - the latter two introducing, in effect, past variables as well in the policy rule and known as "policy inertia" (which helps prevent indeterminacy of equilibrium - see, e.g., McKnight, S. and Mihailov, A. (2015), "Do real balance effects invalidate the Taylor principle in closed and open economies?" Economica, 82 (328), 938-975, doi: 10.1111/ecca.12134); and/or to the nominal or real exchange rate in open-economy models." [see, e.g., Gali, J. (2015, 2nd ed.), "Monetary Policy, Inflation and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications"; Princeton and Oxford: Princeton University Press.]

(2) "The constant κ {\displaystyle \kappa } captures the response of inflation to output,"

Should, more precisely, state: "The constant κ {\displaystyle \kappa }, a composite parameter that can be defined in alternative ways depending on the specific model microfoundations, captures the response of inflation to the (theoretical) output gap. The latter is defined in the New Keynesian model(s) as the deviation of (the natural logarithm of) current output from the hypothetical output that would prevail under fully flexible prices, differently from the (empirical) output gap in the earlier literature measured as deviation of output from some trend. It is also shown in the New Keynesian framework that the output gap is proportional to the deviation of (the natural logarithm of) average real marginal cost of production from its steady state (or long-run) level, so that a version of the NKPC can be written using such a real marginal cost term in place of the output gap term. NKPC specifications, including open-economy ones, vary as well according to the precise microfoundations, and may include more terms." [see Gali, Jordi (2015, 2nd ed.), "Monetary Policy, Inflation and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications"; Princeton and Oxford: Princeton University Press; pp. 60-61 and pp. 62-63, in particular.]

(3) "However, the model was oversimplified in some respects (for example, there is no capital or investment)."

Should, perhaps, expand a bit, stating: "However, the model was oversimplified in some respects: for example, there is no capital or investment; there is just a single interest rate, and not some - even simplified - term structure (or yield curve) for the most important interest rates in the economy (including on bank deposits and loans); there is no consideration of plausible forms of bounded rationality or expectations formation that goes beyond rational expectations; economic agents - essentially, households and firms - are assumed to be representative (that is, identical in their utility or technology functions) and not heterogeneous, and to operate under perfect information, usually observing the few shocks driving the business-cycle fluctuations in the model (whose structure is assumed known to agents too). Most of these limitations have been, or are being, addressed in the so-called medium-scale New Keynesian models of the next generation." [see, e.g., Christiano, L.J., Trabandt, M. and Walentin, K. (2010), “DSGE models for monetary policy analysis,” in B.M. Friedman and M. Woodford (eds), Handbook of Monetary Economics Vol. 3A, Amsterdam: Elsevier Science, North-Holland.]

(4) "The common features of these models included:"

Should, more precisely, state: "The common features of these models included additional frictions and shocks, such as:"

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Mihailov has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Stephen McKnight & Alexander Mihailov & Kerry Patterson & Fabio Rumler, 2014. "The Predictive Performance of Fundamental Inflation Concepts: An Application to the Euro Area and the United States," Economics & Management Discussion Papers em-dp2014-03, Henley Business School, Reading University.

ExpertIdeasBot (talk) 13:29, 11 June 2016 (UTC)

Dr. Di Dio's comment on this article

Dr. Di Dio has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article is quite complete to make a cursory look at the literature on the New Keynesian Economics. It is not a simple task being the NK literature highly fragmented and made of 'buildings blocks'.

The idea to distill the great deal of NK information into some target periods is nice and help the reader better familiarize with the topic. Below some remarks about it:

"In particular, New Keynesians assume that there is imperfect competition in price and wage setting to help explain why prices and wages can become "sticky", which means they do not adjust instantaneously to changes in economic conditions."

Price and wage stickiness is something observed in reality and the New Keynesians' effort has been to provide a theoretical framework to be used to explain their role in the economic system.

Hence, I would change the above sentence in the middle as follows:

"In particular, New Keynesians assume that there is imperfect competition in price and wage setting also accounting for prices and wages stickiness, namely variables do not adjust instantaneously to changes in economic conditions."

" to maintain credibility through rules based policy like inflation targeting"

to change into:

" to maintain credibility through policy rules like inflation targeting"

Note 46 and 47 report the same information.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Di Dio has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Barbara Annicchiarico & Fabio di Dio, 2013. "Environmental Policy and Macroeconomic Dynamics in a New Keynesian Model," CEIS Research Paper 286, Tor Vergata University, CEIS, revised 30 Sep 2013.

ExpertIdeasBot (talk) 19:08, 30 August 2016 (UTC)

Lack of criticism

Normally a page like this would include of "criticisms" or similar section. This article currently only includes the face-value claims of the theory, presented as facts.98.246.153.16 (talk) 08:13, 10 March 2023 (UTC)