The "Overton window" is basically the range of positions on a certain question that are considered reasonable. In macroeconomic policy discussions in the United States, certain positions are, for whatever reason, outside the Overton window - Marxist ideas, mercantilist ideas, the gold standard, etc. Whatever your position is in an argument, you want it to be in the middle of the Overton window instead of at the edge. You do not want to be seen as someone who is on the borderline between serious and kook.
In the debate over the causes of, and proper responses to, the current recession, the Overton window matters. If one edge of the window corresponds to Old Keynesianism and the other edge corresponds to the policy status quo, it's likely that what will end up happening will be something in between those two extremes, e.g. more quantitative easing. But if the rightmost edge of the window corresponds to the idea that demand shocks don't affect output at all, then what will end up happening will probably look more like the status quo.
Hence it makes practical sense for economists who favor less countercyclical policy to try to yank the Overton window toward the right, even if their objective analyses admit the possibility that Keynesians might be right. Or even if conservative economists don't do this intentionally, it certainly helps their cause when someone does it.
For example of arguments that shift the Overton window rightward, here is Garrett Jones suggesting that we pay attention to RBC models:
One of the major schools of thought in macroeconomics rarely makes it into mainstream discussions: Real Business Cycle Theory...[A]s long as big ideas come in waves, as long as energy supplies depend on the vagaries of global politics, and as long as politicians enact policies that weaken confidence in the health of a nation's economic institutions, RBC will matter.Notice that the "technology shock" that Jones hints is responsible for our current recession is just the supposed leftist policies of the Obama administration.
For another example, here's John Cochrane:
A logical possibility of course is that drawn-out recessions following financial crises...reflect particularly ham-handed policies followed by governments after financial crises. Financial crises are followed by bailouts, propping up zombie banks, stimulus, heavy regulation, generous unemployment and disability benefits, mortgage interventions, debt crises and high distortionary taxation (European "Austerity" consists largely of taxes that say "don't start a business here") and so on...It is certainly possible that these, rather than "financial crisis" are the cause of slow recovery, and thus that slow recovery is a self-inflicted wound rather than an inevitable fate.
The similar policy mix in the Great Depression is now accused by a strand of scholarship as the prime cause of that depression's extraordinary length, not valiant but sadly insufficient fixes. (For example, see Lee Ohanian; for some more popular summaries see Jim Powell or Amity Shlaes.)Amity Shlaes? Really?
Note that both Jones and Cochrane make almost explicit reference to the Overton window. Jones says RBC "rarely makes it into mainstream discussions," while Cochrane says "It's certainly possible" that Obama is behind the slow recovery. They aren't claiming that this extreme view is true. They merely wanted it included in the discussion. They want the Overton window to include it.
Is the idea - that Obama's policies have caused our slow recovery - plausible? Well, I guess so, in a generalized, I'm-open-minded-and-willing-to-consider-any-proposition sort of way. But by that standard, quite a lot of things are plausible that no one is talking about nowadays. If you're going to argue that aggregate demand doesn't affect output, you're going to have a very difficult time explaining the initial steep plunge of GDP in 2008-9, before Obama had had a chance to do anything (and you're going to have a very hard time explaining what happened to the price level during that time).