46 Journal of Economic Perspectives new classical, and new Keynesian-are to old macroeconomics as Copernicus was to Ptolemy. It just takes time before Copernican truths can outdo Ptolemaic approximations in practical applications Considering the alternatives, i do not mind being billed as a Keynesian an old Keynesian at that. But old Keynesians come in several varieties, and peak for no one but myself. nor do I defend the literal text of The General Theory. Several generations of economists have criticized, amended, and elabo rated that seminal work. I shall argue for the validity of the major propositions that distinguish Keynesian macroeconomics from old or new classical macroeconomIcs Summary of the Keynesian Case The central proposition of Keynesian economics is commonly described as follows: " According to the Keynesian view, fluctuations in output arise largely from fuctuations in nominal aggregate demand. These fuctuations have real effects because nominal wages and prices are rigid"(Ball, Mankiw, and Romer, 1988, p. 1). On the contrary, I shall argue that Keynesian macroeconomics neither asserts nor requires nominal wage and or price rigidity. It does and require that markets not be instantaneously and continuously cle prices. That is a much less restrictive assumption, and much less contre It leaves plenty of room for flexibility in any commonsense meaning of the rd cr Keynesian models were said to be vulnerable to the charge that"the ucial nominal rigidities were assumed rather than explained, although"it ras clearly in the interests of agents to eliminate the rigidities they were assumed to create.. Thus the 1970s and 1980s saw many economists turn away from Keynesian theories and toward new classical models with flexible wages and prices"(Ball, Mankiw, and Romer, 1988, P. 2). Those market- clearing models have not just flexible prices but perfectly and instantaneously fexible prices, an assumption that is surely more extreme, more arbitrary, and more devoid of foundations in individual rational behavior than the imperfect flexibility of Keynesian models e central Keynesian proposition is not nominal price rigidity but the neous and complete market clearing, output and employment are frequentl onstrained by aggregate demand. In these excess-supply regimes, agents demands are limited by their inability to sell as much as they would like at prevailing prices. Any failure of price adjustments to keep markets cleared opens the door for quantities to determine quantities, for example real national come to determine consumption demand, as described in Keynes' multiplier calculus