After a brief review of the main differences between New and Old Keynesian economics from the sixties this paper focuses on a tension between traditional sluggish measures of potential output commonly used by policymakers and the New Keynesian (NK) notion of this variable which conceptualizes it...

Fears of deflation and long-term stagnation have become more commonplace since the Great Recession. Yet, within the mainstream, economists are divided into two camps: those who see the benefits of downward wage and price adjustment, as a private sector stabilizer, and those who fear deflationary...