The article discusses the economic difficulties from which the industrialized nations have been suffering for the past years giving special regard to the controversy as to what concept of economic policy should be adopted in order to overcome the present problems.

This paper analyses the impact of asymmetric preferences with respect to inflation and output by policymakers on interest-rate reaction functions and test for their existence. A modified New Keynesian framework which makes it possible to identify the dominant type of asymmetry is developed and...