The New Keynesian Economics.

• Author: Sesselmeier, Werner

The book gives a rather detailed overview of what is usually called New Keynesian Macroeconomics. The title "The New Keynesian Economics" alone justifies this book, because the authors make clear that the new research fields in Keynesian economics are not to be found in macroeconomics, but in the microfoundation of the traditional Keynesian problems, namely sticky prices and wages. The several chapters are written at a level which would be both accessible and useful to graduate students and teachers interested in macroeconomic and microeconomic questions in the broad field of New Keynesian Economics. Therefore the book could be used as textbook as well as monograph.

The well-written book is clearly structured in five parts. The first part, the "Introduction," gives an overview over the development from Keynesian to New Keynesian Economics and over the Keynesian microfoundations in historical perspective. This is a brief survey of the several waves since the beginning of this research field with the paper by Clower in 1965 until the contributions of Malinvaud and others. On this basis the authors introduce the three main areas of New Keynesian Economics: Real rigidities, nominal rigidities, co-ordination failures and hysteresis.

The book ends with some conclusions about the present level of this research programme and a vast list of references, which would be useful for further investigation.

The first large part contains the three fields of real rigidities: real wage rigidities and the labor market, credit rationing and imperfect capital markets, real rigidities in the goods market. Each chapter has an own introduction and concluding remarks and a clear structure due to the main issues of the different theories. This has the advantage that the reader gains knowledge of the principle problems and ideas of each theory. It has the disadvantage of shortening the arguments. The authors labelled one chapter as "Real Wage...