The ‘new economy’ has become a buzzword to characterise the American economy, with positive connotations but imprecise meaning. Sometimes it is used to refer only to selected high technology sectors, specifically computers, semiconductors, software and telecommunications. But usually the term implies significant changes in the US economy as a whole. At its most dramatic, the term has been used to suggest that the traditional business cycle has been banished, inflation and unemployment have been brought forever under control, US longterm growth rates have increased significantly, and the highvalue stock market has not been overvalued and indeed will continue to rise. More modestly, it suggests that the structure of the US economy has changed fundamentally, with the implication, inter alia, that monetary and fiscal measures affect the economy differently from the way they did in the past. Finally, the term has been used to suggest that US productivity growth has returned to, or at least toward, the high levels it enjoyed before the slowdown of the mid-1970s.