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New Keynesian economics : a monetary perspective

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  • Stephen D. Williamson

Abstract

In this article we construct a simple analytically tractable model to explore and evaluate New Keynesian ideas. First, we show that a New Keynesian model need not exhibit Phillips curve correlations in the absence of strategic price setting by firms. Second, we conclude that New Keynesian economics needlessly neglects monetary frictions and misses out on some key insights in the process. For example, it is important to understand how the central bank should manipulate monetary quantities to support particular nominal interest rate rules

Suggested Citation

  • Stephen D. Williamson, 2008. "New Keynesian economics : a monetary perspective," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 94(Sum), pages 197-218.
    • Handle: RePEc:fip:fedreq:y:2008:i:sum:p:197-218:n:v.94no.3
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    1. Akhand Akhtar Hossain, 2015. "The Evolution of Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 14611.
    2. Andreas Hornstein, 2008. "Introduction to the New Keynesian Phillips curve," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 94(Fall), pages 301-309.
    3. Akhand Hossain, 2014. "Monetary policy, inflation, and inflation volatility in Australia," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(4), pages 745-780.

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    Economics; Monetary theory;

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