divine coincidence

English

Noun

divine coincidence (countable and uncountable, plural divine coincidences)

1. (economics) The property of a (New Keynesian) macroeconomic model that stabilizing inflation and stabilizing the (relevant) output gap is equivalent.
   • 2007, Oliver Blanchard and Jordi Galí, Real Wage Rigidities and the New Keynesian Model, Journal of Money, Credit and Banking 39(s1), pp. 35--65

     In [the standard new Keynesian framework], stabilizing inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new Keynesian framework, which we call the divine coincidence, is due to a special feature of the model […]

   • 2023, Eric Sims, Jing Cynthia Wu, and Ji Zhang, The Four-Equation New Keynesian Model, The Review of Economics and Statistics 105(4), pp. 931--947

     Because credit shocks appear in the Phillips curve, the so-called divine coincidence […] does not hold, and it is not possible to achieve the global minimum of the loss function with just one policy instrument.