What is modern macroeconomics?

It is models of the economy using methods of new classical economics with Keynesian price rigidities (and the occasional relaxing of the assumption of rational expectations). That encyclopedia article is great, by the way.

Apropos of nothing, this is from the same encyclopedia’s article on fiscal policy:

The greatest obstacle to proper use of fiscal policy—both for its ability to stabilize fluctuations in the short run and for its long-run effect on the natural rate of output—is that changes in fiscal policy are necessarily bundled with other changes that please or displease various constituencies. A road in Congressman X’s district is all the more likely to be built if it can be packaged as part of countercyclical fiscal policy. The same is true for a tax cut for some favored constituency. This naturally leads to an institutional enthusiasm for expansionary policies during recessions that is not matched by a taste for contractionary policies during booms.