Greg Mankiw
Gregory Mankiw, was a leading New Keynesian, and contributed primarily through his work on menu costs and sticky prices:
- Menu Cost Theory
- Mankiw’s research showed that even small costs of changing prices (like reprinting menus) can lead to price stickiness, which disrupts market equilibrium and slows economic recovery.
- This helps explain why firms do not continuously adjust prices in response to demand changes.
- Macroeconomic Policy Implications
- Since prices and wages adjust slowly, monetary and fiscal interventions are needed to stabilize output and employment.
- His work supports central bank interventions and active government policies during recessions.
- Textbook Influence
- Mankiw's macroeconomics textbooks popularized New Keynesian ideas, making them mainstream in economic education. One of his important textbooks is Principles of Economics.