Macroeconomics has been in an unsettled state since the early 1970s. The Keynesian model, which was almost universally accepted as the basic paradigm until the late 1960s, is regarded by most economists as scientifically not quite respectable. Periodically, some group of economists tries to patch up the Keynesian framework—the most recent effort was by the new Keynesians in the 1980s—but the results have never really been successful.
The term new Keynesians denotes a loosely connected group of researchers who shared a common belief that the synthesis that emerged in response to the rational-expectations critique was basically correct. But they also shared the belief that much remained to be learned about the nature of imperfections in different markets and about the implications of those imperfections for macroeconomic fluctuations.
Colander: What’s your view of the New Keynesian approach? Tobin: Well, that’s just the enemy.