Phelps provides a theoretical explanation of why rapid productivity growth, good employment performance, and current account deficits tend to go together. There are two strands to it. One is an application of Phelps's well-known theory of the firm's offer of employment as an investment decision....

We should learn from Keynes to focus on the macroproblems of our day. Today's problem is the financial crisis and the resulting great recession. Neither the standard Keynesian policies of decades past nor the monetary policy doctrine of recent years provides useful solutions. Dynamic stochastic...