December 19, 2008

Economic Quarterly Explores New Keynesian Economics

New Keynesian Economics: A Monetary Perspective by Stephen D. Williamson

John Maynard Keynes published his famous General Theory of Employment, Interest, and Money in 1936. The book has been highly influential and has led subsequent generations of economists to revise the Keynesian framework as new theory and data emerge, giving rise to “New Keynesian Economics.” In the latest issue of the Federal Reserve Bank of Richmond’s Economic Quarterly, Stephen Williamson of Washington University and a visiting scholar at the Bank evaluates the overall success of the New Keynesian project. He concludes that “typical New Keynesian models ignore credit markets, monetary frictions, and banking and are, therefore, of little or no use” in addressing some of the most pressing questions facing monetary economists and central bankers. But he believes that, given recent developments in the profession, “a comprehensive theory of central banking is certainly within our grasp.”

You can find the full text of this article and others in the latest issue of Economic Quarterly at:

Also in the Summer 2008 issue:

  • Nominal Frictions, Relative Price Adjustment, and the Limits to Monetary Policy by Alexander L. Wolman
  • Understanding Monetary Policy Implementation by Huberto M. Ennis and Todd Keister
  • CEO Compensation: Trends, Market Changes, and Regulation by Arantxa Jarque

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. For free copies or more information, contact the Federal Reserve Bank of Richmond’s Public Affairs office at 804.697.7982.

The Richmond Fed serves the Fifth Federal Reserve District, which includes the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. As part of the nation's central bank, we're one of 12 regional Reserve Banks that work together with the Federal Reserve's Board of Governors to strengthen the economy and our communities. We manage the nation's money supply to keep inflation low and help the economy grow. We also supervise and regulate financial institutions to help safeguard our nation's financial system and protect the integrity and efficiency of our payments system.


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