After a short recession at the beginning of the 1990s, the United States entered its longest peacetime economic expansion in history. In the second half of the decade, the remarkable macroeconomic performance led to a controversy whether or not the U.S. economy had evolved into a "New Economy." This paper provides an overview of the debate in the U.S. It introduces different definitions of the New Economy and provides a new one that is quantifiable. A second aim of the analysis is to summarize the prevailing explanations for the observed macroeconomic development. The fundamental hypotheses of the New Economy proponents are identified and contrasted with their critics.
