Since the beginning of the seventies (e.g. Akerlof 1970, Williamson 1971), economic theory has been passing through a phase of deep evolution, characterised inter alia by an emphasis on market failures and by a search for sounder microfoundations for macroeconomics. Of particular significance have been the fundamental challenges to traditional general equilibrium theory emanating from “new institutional economics” and from “new Keynesian economics”. The purpose of this chapter is to describe and evaluate key elements of these two approaches.