The chapter deals with the economics in the Harvard-MIT economics network, which includes the economics departments at Harvard, MIT, Yale, Princeton, Stanford, and the University of Pennsylvania. During the early part of this period, the older generation of economists—figures such as Samuelson, Modigliani, Solow, Tobin, and Klein, who had shaped mainstream economics in the first 25 years after World War II—continued to play a significant, though declining, role. At the same time, younger economists contributed to emergence of a research program aimed at developing a new Keynesian economics. Firstly, the chapter discusses the response of the older generation to the rise of New Classical Macroeconomics. Then, the chapter explores the development of New Keynesian Economics, focusing on its two main strands—the first centered on wage and price rigidities, and the second on asymmetric information. Particular attention is given to the innovative contributions of George Akerlof and Joseph Stiglitz, whose work was instrumental in reconstructing economic theory from an anti-neoclassical perspective.