Some critical aspects of the “new Keynesian macroeconomics”

Abstract

This paper argues that the new “Keynesian macroeconomics” presents some
weak points by ignoring the long-run effects of aggregate demand on the working of the
economic system. In order to introduce this1 reality, the paper shows that it is necessary to
define the relationships between real wage and unemployment in a manner that sheds light
on the crucial policies of employment and growth. This is done by introducing an investment
function which makes possible to determine different long run paths for the economy
according to the state of the “animal spirits” of the entrepreneurs.

JEL Classification: B22; E12.