Origins
Significant early contributions to New Keynesian theory were compiled in 1991 by editors N. Gregory Mankiw and David Romer in New Keynesian Economics, volumes 1 and 2. The papers in these volumes focused mostly on microfoundations, that is, microeconomic ingredients that could produce Keynesian macroeconomic effects, and did not yet attempt to construct complete macroeconomic models.
More recently, macroeconomists have begun to build Dynamic Stochastic General Equilibrium (DSGE) models with Keynesian features. The New Keynesian DSGE modeling methodology is explained in Michael Woodford's textbook Interest and Prices: Foundations of a Theory of Monetary Policy. Economists are now actively estimating quantitative models of this type, and using them to analyze optimal monetary and fiscal policy.
Read more about this topic: New Keynesian Economics
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