Among macroeconomists, broad-though not unanimous-agreement exists that aggregate demand affects output and employment in the short run, that prices and wages are sticky enough for demand shocks to cause real economic disruption rather than being absorbed instantly by price adjustment, and that monetary and fiscal policy can therefore influence short-run economic activity. This core of Keynesian economics is sometimes called the “New Keynesian” synthesis and is incorporated, in some form, into the macroeconomic models used by most central banks and many academic macroeconomists, including economists who do not self-identify as Keynesians.¹⁾

This consensus is narrower than it is sometimes portrayed. It does not extend to agreement on the size of fiscal multipliers, the desirability or efficacy of discretionary fiscal stimulus (as opposed to automatic stabilizers or monetary policy), the long-run neutrality of money, or the proper scope of government intervention in recessions. On these questions, expert opinion divides along lines that roughly track-though do not map perfectly onto-New Keynesian, New Classical, monetarist, and other schools within mainstream macroeconomics, as well as heterodox traditions such as Post-Keynesian economics and Austrian economics that reject parts of the mainstream framework outright.

A substantial majority of academic macroeconomists agree that nominal price and wage rigidities are empirically significant and that, as a result, demand-side shocks have real effects on output and employment over horizons of months to a few years. This view is supported by decades of empirical work on price-setting behavior, survey evidence on wage stickiness, and the broad fit of New Keynesian dynamic stochastic general equilibrium (DSGE) models to observed business-cycle data. It is held across a wide range of academic institutions and is not contingent on any single funding source or policy orientation.

There is strong agreement, including among economists who are skeptical of discretionary fiscal policy, that central bank monetary policy can influence short-run output and employment, and that monetary policy is an appropriate primary tool for macroeconomic stabilization under normal conditions. This is reflected in the design of inflation-targeting and similar frameworks adopted by most major central banks, and represents one of the most durable points of agreement between Keynesian-influenced and monetarist traditions.

There is broad agreement that automatic fiscal stabilizers-unemployment insurance, progressive taxation, and similar mechanisms that increase deficits during downturns without new legislative action-dampen the severity of recessions. This is among the least contested claims associated with Keynesian-influenced macroeconomics and draws support from economists across the ideological spectrum.

Following the 2007-2009 financial crisis, a majority of surveyed macroeconomists came to agree that when short-term interest rates approach zero, conventional monetary policy loses effectiveness and fiscal policy, or unconventional monetary tools such as quantitative easing, can play a larger stabilizing role than under normal conditions.²⁾ Survey data collected by the IGM Economic Experts Panel at the University of Chicago Booth School of Business found majority agreement among panelists that U.S. fiscal stimulus measures following the 2008 crisis lowered unemployment relative to the counterfactual, though with a meaningful minority expressing uncertainty or disagreement.³⁾

The consensus described above does not extend to several adjacent and frequently conflated questions:

• Multiplier size. Estimates of the fiscal multiplier-how much output increases per dollar of government spending-vary substantially across studies, time periods, and economic conditions (e.g., whether the economy is at the zero lower bound), and no settled consensus value exists. Some studies find multipliers below one; others, particularly for spending during liquidity-constrained periods, find multipliers above one.⁴⁾
• Discretionary fiscal policy. Whether governments should use discretionary spending or tax changes (as opposed to relying on automatic stabilizers and monetary policy) to manage ordinary business cycles remains contested. Concerns include implementation lags, the political difficulty of timely withdrawal of stimulus, and crowding-out effects on private investment.
• Long-run effects of debt-financed stimulus. Economists disagree about the long-run consequences of debt accumulated through stimulus spending, including effects on interest rates, future tax burdens, and growth.
• Applicability outside demand-deficient recessions. There is no consensus that demand-management tools are effective or appropriate responses to recessions driven primarily by supply shocks, structural change, or financial-sector dysfunction, as opposed to shortfalls in aggregate demand.
• Heterodox dissent. Some traditions, including Austrian economics and certain New Classical and real-business-cycle approaches, reject the premise that price and wage rigidities are significant enough to justify demand management at all. Post-Keynesian economists, by contrast, generally accept demand effects but reject aspects of the New Keynesian synthesis itself, including its reliance on representative-agent DSGE modeling.

The consensus documented here is a position within mainstream academic macroeconomics; it does not represent agreement across all economists or across all schools of economic thought, and it should not be read as resolving debates about appropriate policy responses to specific historical episodes, such as those addressed in the New Deal economics debate.

• Keynesian Economics Austrian Viewpoint - rejects the rigidity assumptions underlying Keynesian demand-management policy and attributes business cycles primarily to monetary and credit distortions rather than demand deficiency.
• Keynesian Economics New Classical Viewpoint - emphasizes rational expectations and policy ineffectiveness arguments that question the efficacy of discretionary demand management.
• Post-Keynesian Viewpoint - accepts demand-side effects but rejects the New Keynesian synthesis's modeling approach and many of its policy conclusions.
• Franklin Roosevelt Progressive Viewpoint and New Deal Liberal Defense Viewpoint - historical and political viewpoints applying Keynesian-influenced reasoning to specific policy episodes, distinct from the technical consensus described here.

• Keynesian economics
• Keynesian Economics - History
• New Deal Economics Debate
• Fiscal Multiplier Debate
• Monetary Policy - Economics Consensus
• Minimum Wage - Economic Consensus

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