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Nick, a very interesting post. I've never seen that history spelled out before. Thanks. Question: I saw you commented on Mike Freimuth's endogenous money model post. Did you examine the model itself? Does it bear any relation to any of the stages of NK thinking you've spelled out here? He has two follow up posts on the model BTW.

Tom: thanks!

Yep, I did read (or skim) the model itself. It's not a NK model.

Very interesting Nick!

I think I had overestimated the importance of rational expectatons in the development of New Keynesianism.

Would it be fair to say that it was only in Stage 3 that the monetarists and the New Keynesians fundamentally parted ways?

W Peden: Thanks!

"Would it be fair to say that it was only in Stage 3 that the monetarists and the New Keynesians fundamentally parted ways?"

Yes! Except that, by then, I think that monetarism had more or less disappeared as a separate entity, and had become absorbed into New Keynesianism.

Nick, thanks for this post. I liked it so much I added it to the list of references in the Wikipedia article on New Keynesian economics - which gives a somewhat different account of the evolution of New Keynesianism. My guess is that's because Wikipedia is edited by youngsters who lack your broad vision of history! F.

Thanks Frances! The Wikipedia entry is quite good.

A lovely presentation of the history!

One piece is a bit awkward, at least for teaching vocabulary. In Woodford's terminology, which seems to be becoming the standard among New Keynesians, a model with prices set one period ahead but otherwise flexible is New Classical. You need something like Calvo pricing to get a "New Keynesian Phillips curve", for example. That's rather at odds with your Stage 0, Stage 1 transition.

Is it just semantics?

Michael: Sorry, your comment got stuck in spam, and I only just saw it.

Thanks! Unless the central bank has a one-period information lag, there is still a role for the central bank to respond to shocks. The Phillips Curve will be perfectly flat for one period, then vertical. I think it's semantics.

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