The 'Divine Coincidence' in economic modeling suggests that a central bank can achieve price stability and full employment simultaneously without a trade-off. When targeting inflation, the bank might also stabilize output at its potential level, because fluctuations in inflation are easier to observe than potential output. However, this coincidence does not always hold in the New Keynesian model. It applies when facing demand-side shocks and potential output changes, but not when dealing with shocks to input prices or expected inflation, which can decouple price stability from full employment