New Keynesian IS curve:
\(\ln Y_t = -\frac{1}{\theta} (r - \rho) + \ln Y_{t + 1}\)
where there is a negative relationship between output and the real interest rate.
New Keynesian LM curve:
\(\ln Y_t = \frac{\gamma}{\theta} \ln (\frac{M_t}{P_t}) - \frac{1}{\theta} \ln (\frac{1 + i}{i})\)
which implies a positive relationship between the interest rate and output.
The model also utilizes the Phillips curve, showing that there is a relationship between inflation and output, however, Lucas will show that that relationship is not exploitable by monetary authorities (since expectations would break it down).