Colander and New Keynesian Economics

["RICHARD P.F. HOLT" <holtri@xxxxxxxxxxxxx>]

David Colander at the Eastern Meetings in March will be organizing
a mini-conference on New Keynesian economics. At a post keynesian workshop
last summer David presented a paper from a book in progress with Harry
Garreston on the macrofoundations of micro. In the paper he gives his
definition of New Keynesian Economics. I would like to quote it for I
think that David is coming up with some interesting ideas that need to
be discussed:

"So then, why do we call it a New Keynesian approach? The reason has to
do with vision. We believe that what Keynes was groping for in _The_General_
Theory_ was this macrofoundation of micro perspective. That is why he
called his theory the general theory and the Classical theory a special case
of his general theory. That claim is only true in multi equilibria
macrofoundations of perspective. We call our approach "New Keynesian"
because we believe it to be in a theoretical Keynesian tradition that sees
macroeconomic coordination failures as possible and various alternative
macroequilibria are possible. In our model, the Keynesian multiple equilbria
view of the macro economy is the general theory; the Classical model is a
special case of that general theory relevant under the strong assumption
that existing institutions better coordinate the aggregate economy than
do all other institutional structures.... Calling our approach "New Keynesian"
is not without its problems. We fully agree that Keynes did not maintain a
macro persepective throughout his book. Often when he started to formalize
and set up a micro structure to fit into his macro vision, he reverted back
to a micro perspective and thereby set up the neoKeynesian interpretation of
his ideas. Thus, much of what is currently called "Keynesian" or even New
Keynesian does not use a macrofoundations perspective. And that, we argue,
is what is wrong with it." pp.10-11. From a rought draft paper by David Colanderand Harry Garreston, "New Keynesian Economics and the Macrofoundation of Micro."

So, what do people think of New Keynesian economics as defined by Colander
and Garretson?
-Ric Holt