There are old and new Keynesian models. Austrian economists reject both on various grounds. Livio Stracca, not of the Austrian school, has a working paper in which he examines a new Keynesian model. Both models have an “IS” curve that has been taught to generations of students in macroeconomics courses. Stracca’s abstract says “Overall, I conclude that the New Keynesian IS curve, at least in its most common formulations, is not structural and is overwhelmingly rejected by the data.” “…the key forcing variable in such models, the ex ante real interest rate, is often statistically insignificant or wrongly signed…” Mind … Continue reading New Keynesian Model Rejected by ECB Economist