Keynesian economics

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Keynesian economics

(ECONOMICS) an account of the working of macroeconomic systems first propounded by John Maynard KEYNES, in which it is assumed that the economy is not self-managing and that governments must act to avoid prolonged recessions and secure FULL EMPLOYMENT. Directly at odds with much that had been previously assumed (see NEOCLASSICAL ECONOMICS), Keynes proposed government management of the economy – through monetary as well as fiscal policies – in which government expenditure would be increased at times of recession and reduced at times of FULL EMPLOYMENT and INFLATION, thus controlling aggregate demand within the economy. The adoption of Keynesian policies by governments seemed to be successful until the 1960s, when inflation and lack of economic growth began to emerge as a problem. Since then, while Keynesian economics still has many supporters, other macroeconomic theories, notably MONETARISM, have been in the ascendant.
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Also, he had a particular role in bringing Keynesian theory, with the precision of mathematical adjuncts, into association with active economic policy in the United States and, if only in slightly lesser measure, the other developed nations.
Keynesian theory called for regulating aggregate demand through counter-cyclical government spending, stimulating the economy when it was sluggish and restraining it when it was too vigorous.
The key ingredient of Keynesian theory is the assumption that excess capacity is the normal state of affairs, and that fluctuations in demand drive movements in output.
As an in-depth scholarly study of the economics and Keynesian theory, The Elegar Companion To Post Keynesian Economics delves extensively into a political and theory-based post-Keynesian economics, including essays, analysis and other contributions from dozens of economic leaders worldwide.
It has enacted two general tax cuts and a variety of tax credits, based on a distortion of Keynesian theory that confuses national monetary theory with state fiscal policy.
The explanation according to the everyday Keynesian theory can be illustrated as follows.
When Republicans aren't shamelessly using Keynesian theory for their own ends, they're reverting to the supply-side notion that people will work harder if they can keep more of the money they earn.
If many of the most distinctive features of 1930s Keynesianism were in fact a product of the gold standard, then the move to fiat money regimes should have had very specific effects on the development of Keynesian theory and policy.
With broad standard economic indicators (e.g., unemployment and inflation) as examples, Lee's next step is to show how the use of Keynesian theory since the 1960s has failed.
In 1947, only a year before our seminar, one of the first economics textbook to present keynesian theory (by Paul Samuelson) came out; it was promptly banned as "communistic" in more than one state.
For a scientist, in this case a professional economist, it would be an unforgivable mistake to think, even for a moment, that the Walrasian theory of stable equilibrium based on numeraire-currency was negating or replacing the Keynesian theory of unstable equilibrium planted together with anti-numeraire currency in the form of paper- and credit-money.
And, indeed, conventional economic wisdom has by now come to regard the Keynesian theory as a theory of disequilibrium, which provides a useful way to analyze the process of adjustment to changes in circumstances in a world of relatively rigid prices and wages.