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.Keynesian economics (pronounced /ˈkeɪnziən/, also called Keynesianism and Keynesian Theory) is a macroeconomic theory based on the ideas of 20th-century British economist John Maynard Keynes.^ Keynes's earliest contributions to macroeconomic theory.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ John Maynard Keynes, 1920 .

^ Keynesian economics An economic theory of British economist, John Maynard Keynes that active government intervention is necessary to ensure economic growth and stability.
  • Bloomberg.com: Financial Glossary 17 January 2010 5:10 UTC www.bloomberg.com [Source type: General]

.Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.^ Keynesians favor government actions to stabilize the economy .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ But when expansionary monetary policy has gone as far as it can, banking and fiscal policies have their place.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ A. Keynesian business cycle theory .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

[1] .The theories forming the basis of Keynesian economics were first presented in The General Theory of Employment, Interest and Money, published in 1936; the interpretations of Keynes are contentious, and several schools of thought claim his legacy.^ The basic principles of Keynesian economics were developed by Keynes in his book, The General Theory of Employment, Interest and Money , published in 1936.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ Keynes’s masterwork was his General Theory of Employment, Interest, and Money , published in 1936.

^ Keynesian economics derives from John Maynard Keynes , in particular his book The General Theory of Employment, Interest and Money (1936), which ushered in contemporary macroeconomics as a distinct field.
  • Economics - Wikinfo 17 January 2010 5:10 UTC wikinfo.org [Source type: Academic]
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

.Keynesian economics advocates a mixed economy—predominantly private sector, but with a large role of government and public sector—and served as the economic model during the latter part of the Great Depression, World War II, and the post-war economic expansion (1945–1973), though it lost some influence following the stagflation of the 1970s.^ Posts Tagged ‘Keynesian economics’ .
  • Keynesian Economics | The Foundry: Conservative Policy News. 17 January 2010 5:10 UTC blog.heritage.org [Source type: General]

^ It was the Second World War of 1941-1945 that got this country out of the Depression.
  • The Problem with Keynesian Economics: A Critique from the Left | ItsYourTimes.com 9 February 2010 15:015 UTC www.itsyourtimes.com [Source type: Original source]

^ Models with sticky prices are an important part of New Keynesian economics.
  • New Keynesian Economics and the Phillips Curve 17 January 2010 5:10 UTC ideas.repec.org [Source type: Academic]

.The advent of the global financial crisis in 2007 has caused a resurgence in Keynesian thought.^ Tags: Economy , financial crisis , global economy .
  • All Keynesians Now? | WBUR and NPR - On Point with Tom Ashbrook 9 February 2010 15:015 UTC www.onpointradio.org [Source type: General]

^ Interest rates are a major cause of world financial crisis 2007-2009 discuss?
  • WikiAnswers - In the keynesian model of aggregate expenditure real GDP is determined by what 9 February 2010 15:015 UTC wiki.answers.com [Source type: FILTERED WITH BAYES]
  • WikiAnswers - What is the similarities between classical and keynesian school of thoughts in economics 9 February 2010 15:015 UTC wiki.answers.com [Source type: General]

^ Did the global financial crisis of 2008 prove that developing countries should not open their financial systems?

.The British Prime Minister Gordon Brown and other global leaders have used the theory of Keynesian economics to justify intervening in the world economy.^ Gordon Brown's Keynesian con .
  • Gordon Brown's Keynesian con – Telegraph Blogs 9 February 2010 15:015 UTC blogs.telegraph.co.uk [Source type: News]

^ This is Keynesian economic theory in action.
  • Effor.com » Keynesian 9 February 2010 15:015 UTC www.effor.com [Source type: General]

^ Post Keynesian Economic Theory, ed.
  • ECONOMICS 601 17 January 2010 5:10 UTC k.web.umkc.edu [Source type: FILTERED WITH BAYES]

[2]

Contents

Overview

.In Keynes's theory, there are some micro-level actions of individuals and firms that can lead to aggregate macroeconomic outcomes in which the economy operates below its potential output and growth.^ Keynes's earliest contributions to macroeconomic theory.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ The economy's output can fall significantly below its potential level, but it cannot rise significantly above it.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ Some of the growth in output here is astonishing.
  • MyProps.org - Of Soybeans and Silver - The Daily Reckoning Australia 17 January 2010 5:10 UTC myprops.org [Source type: FILTERED WITH BAYES]

.Some classical economists had believed in Say's Law, that "supply creates its own demand", so that a "general glut" would therefore be impossible.^ He emphatically felt that supply did not create its own demand.
  • PGM5 17 January 2010 5:10 UTC www.efcvideo.com [Source type: FILTERED WITH BAYES]

^ Forget about the laws of supply and demand.
  • Natural Born Conservative: Obama's Cluelessian Economics - Not Keynesian 17 January 2010 5:10 UTC larrymwalkerjr.blogspot.com [Source type: General]

^ The school disagrees with classical economics and Say's Law that supply creates its own demand.

.Keynes contended that aggregate demand for goods might be insufficient during economic downturns, leading to unnecessarily high unemployment and losses of potential output.^ Demand pull inflation -- inflation from high demand for goods and low unemployment.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

^ Keynes: In a recession falling aggregate demand will lead to unemployment.

^ Aggregate Demand , at Answers.com The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.
  • Aggregate Demand, High School Economics Topics | Library of Economics and Liberty 17 January 2010 5:10 UTC www.econlib.org [Source type: FILTERED WITH BAYES]

.Keynes argued that government policies could be used to increase aggregate demand, thus increasing economic activity and reducing unemployment and deflation.^ Thus, they use their political theory to reject Keynes' economic theory.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Expansionary fiscal policy leads to an increase in aggregate demand.
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ C. Keynes believed that E could settle at a level of economic activity with large amounts of unemployment.
  • Kaynesian Economics: An Expanded View 9 February 2010 15:015 UTC www.businessbookmall.com [Source type: FILTERED WITH BAYES]

.Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches: a reduction in interest rates and government investment in infrastructure.^ Second, Keynes re-analyzed the effect of the interest rate on investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Keynes’s solution was to bypass the conventional economy through the direct intervention of government.

^ From Wikipedia: Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches : * a reduction in interest rates.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

.Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth.^ Unfortunately, government spending does not sustain, stimulate, or invigorate an economy.
  • Keynesian Budgets Threaten Recovery | The Freeman | Ideas On Liberty 9 February 2010 15:015 UTC www.thefreemanonline.org [Source type: FILTERED WITH BAYES]

^ This increase in production requires more investment.
  • Economics Interactive 9 February 2010 15:015 UTC www.unc.edu [Source type: FILTERED WITH BAYES]
  • Economics Interactive 17 January 2010 5:10 UTC www.unc.edu [Source type: FILTERED WITH BAYES]

^ What evidence that government spending can turn economy around.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.^ The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.
  • GOOOH: Blogging the Revolution!: Keynesian vs. Austrian Economics (By EW) 17 January 2010 5:10 UTC blog.goooh.com [Source type: FILTERED WITH BAYES]
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

^ Keynes argued that investment , which responds to variations in the interest rate and to expectations about the future, is the dynamic factor determining the level of economic activity.
  • Keynesian economics -- Britannica Online Encyclopedia 9 February 2010 15:015 UTC www.britannica.com [Source type: Reference]

^ The model showed how markets magnify the impact of outside shocks and turn, say, an initial one dollar increase in foreign investment into a several dollar increase in total domestic income, to be followed by a decline.
  • Paul A. Samuelson, Who Reshaped Economics, Dies at 94 - Obituary (Obit) - NYTimes.com 17 January 2010 5:10 UTC www.nytimes.com [Source type: News]

[3]
.A central conclusion of Keynesian economics is that, in some situations, no strong automatic mechanism moves output and employment towards full employment levels.^ The economy should be allowed to move toward full employment ...
  • European Tribune - Community, Politics & Progress. 9 February 2010 15:015 UTC www.eurotrib.com [Source type: FILTERED WITH BAYES]

^ Moving on from Chicago Economics Is Keynesian economics dead?
  • Sorting Through Keynesian Rubble | c2c Journal 9 February 2010 15:015 UTC www.c2cjournal.ca [Source type: FILTERED WITH BAYES]

^ The level of employment and amount of output are the "full employment" levels for the economy.
  • Egwald Economics: Macroeconomics - The Keynesian AD-AS Model 9 February 2010 15:015 UTC www.egwald.ca [Source type: Academic]

.This conclusion conflicts with economic approaches that assume a general tendency towards an equilibrium.^ The orthodox microeconomic approach to determining prices and income distribution in competitive general equilibrium based on utility and profit maximization of consumers and firms.
  • Course Descriptions | Graduate Studies | University of Denver 17 January 2010 5:10 UTC www.du.edu [Source type: Academic]

^ This, Keynes thought, conflicts with the tenets of classical economics, and those schools, such as supply-side economics or the Austrian School, which assume a general tendency towards equilibrium in a restrained money creation economy.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ I was enthusiastic about teaching economics until I got my PhD and found out that general equilibrium is all a lie.
  • Bernanke: For Good or For Ill | Newgeography.com 9 February 2010 15:015 UTC www.newgeography.com [Source type: General]

.In the 'neoclassical synthesis', which combines Keynesian macro concepts with a micro foundation, the conditions of general equilibrium allow for price adjustment to achieve this goal.^ In neoclassical economics, which combines Keynesian macro concepts with a micro foundation, the conditions of General equilibrium allow for price adjustment to achieve this goal.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The orthodox microeconomic approach to determining prices and income distribution in competitive general equilibrium based on utility and profit maximization of consumers and firms.
  • Course Descriptions | Graduate Studies | University of Denver 17 January 2010 5:10 UTC www.du.edu [Source type: Academic]

^ The paradigmatic shift that occurred altered the fundamental transmission mechanism for achieving equilibrium from a paradigm in which the market-capitalist economy was viewed in terms of price adjustments, to a paradigm in which price adjustments alone were nearly powerless to bring about, or alter the existing equilibrium.
  • A history of Post Keynesian economics since 1936: a reviewarticle. - Entrepreneur.com 17 January 2010 5:10 UTC www.entrepreneur.com [Source type: Academic]

.More broadly, Keynes saw this as a general theory, in which utilization of resources could be high or low, whereas previous economics focused on the particular case of full utilization.^ Devising a more general theory, in economics as in physics, is a worthy undertaking.
  • KEYNESIAN MYTHS 17 January 2010 5:10 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ More broadly, Keynes saw this as a general theory, in which resource utilization could be high or low, whereas previous economics focused on the particular case of full utilization.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Keynes, General Theory , pp.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.The new classical macroeconomics movement, which began in the late 1960s and early 1970s, criticized Keynesian theories, while New Keynesian economics have sought to base Keynes's idea on more rigorous theoretical foundations.^ We tried the Keynesian approach in the late 1960s and early 70s.
  • small dead animals: The Keynesian Nightmare 17 January 2010 5:10 UTC www.smalldeadanimals.com [Source type: Original source]

^ Create news alert for ' keynesian theory ' » .

^ Keynesian, New Keynesian, Monetarist, and New Classical macroeconomics are variations on a theme.
  • Search Results keynesian « Organizations and Markets 9 February 2010 15:015 UTC organizationsandmarkets.com [Source type: FILTERED WITH BAYES]

.Some interpretations of Keynes have emphasized his stress on the international coordination of Keynesian policies, the need for international economic institutions, and the ways in which economic forces could lead to war or could promote peace.^ Explain the way in which economics is similar to keynesian?
  • WikiAnswers - What is the similarities between classical and keynesian school of thoughts in economics 9 February 2010 15:015 UTC wiki.answers.com [Source type: General]

^ Economic Policy Institute, July 2009.
  • Profile Robert Blecker 17 January 2010 5:10 UTC american.edu [Source type: Academic]

^ The larger part of this book is an interpretation by Keynesians of Keynes' economics and Keynesian economics.
  • Custom essay on Economics / Keynesian Economics - Custom Essay Writing Services 9 February 2010 15:015 UTC www.customtermpapers.org [Source type: FILTERED WITH BAYES]

[4]

Precursors

.Keynes's work was part of a long-running debate within economics over the existence and nature of general gluts.^ Classical economics is right in the long run.
  • What is Post Keynesian Economics? by Ric Holt 9 February 2010 15:015 UTC cc.shu.edu.tw [Source type: FILTERED WITH BAYES]

^ The heart of the debate over Keynes's radical ideas has been whether they could or should be reconciled with the older, neoclassical economic theory.
  • Struggle Over The Keynesian Heritage - Dr. Paul Davidson Business Audio Books / Economics 9 February 2010 15:015 UTC www.talking-book-store.com [Source type: General]

^ Capitalist economies are not self-adjusting: market forces might eventually restore an economy of full employment, as Keynes said, but in the long run we are all dead.

.While a number of the policies Keynes advocated (notably government deficit spending) and the theoretical ideas he proposed (effective demand, the multiplier, the paradox of thrift) were advanced by various authors in the 19th and early 20th century, Keynes's unique contribution was to provide a general theory of these, which proved acceptable to the political and economic establishments.^ Keynes's earliest contributions to macroeconomic theory.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ Thus, they use their political theory to reject Keynes' economic theory.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Keynes's theory suggested that active government policy could be effective in managing the economy.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

Schools

.An intellectual precursor of Keynesian economics was underconsumption theory in classical economics, dating from such 19th century economists as Thomas Malthus, the Birmingham School of Thomas Attwood,[5] and the American economists William Trufant Foster and Waddill Catchings, who were influential in the 1920s and 1930s.^ Such has been the fate of Keynesian economics.
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

^ This is Keynesian economic theory in action.
  • Effor.com » Keynesian 9 February 2010 15:015 UTC www.effor.com [Source type: General]

^ Keynesian Theory "Classical" economic theory (Adam Smith, etc.
  • IEA: Completing the Keynesian Revolution: A Conceptual Framework For Macroeconomic Science 9 February 2010 15:015 UTC www.iea-macro-economics.org [Source type: FILTERED WITH BAYES]

.Underconsumptionists were, like Keynes after them, concerned with failure of aggregate demand to attain potential output, calling this "underconsumption" (focusing on the demand side), rather than "overproduction" (which would focus on the supply side), and advocating economic interventionism.^ This is so because Keynes, like Smith and Ricardo, was concerned with economic aggregates.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www.marxists.org [Source type: FILTERED WITH BAYES]

^ Supply-side economics.
  • LANCE Library Catalog /LANCE 9 February 2010 15:015 UTC lance.missouri.edu [Source type: Academic]

^ Aggregate demand would always equal aggregate supply.
  • Quadrant Online - The Dangers of Keynesian Economics 17 January 2010 5:10 UTC www.quadrant.org.au [Source type: Original source]

.Keynes specifically discussed underconsumption (which he wrote "under-consumption") in the General Theory, in Chapter 22, Section IV and Chapter 23, Section VII.^ What did Keynes actually have in mind when he wrote his General Theory ?
  • KEYNESIAN MYTHS 17 January 2010 5:10 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ Keynes, General Theory , pp.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ It was at this moment that Keynes published his General Theory.
  • Online Library of Liberty - 11: Stones into Bread, the Keynesian Miracle * - Planning for Freedom: Let the Market System Work. A Collection of Essays and Addresses 9 February 2010 15:015 UTC oll.libertyfund.org [Source type: Original source]

.Numerous concepts were developed earlier and independently of Keynes by the Stockholm school during the 1930s; these accomplishments were described in a 1937 article, published in response to the 1936 General Theory, sharing the Swedish discoveries.^ Keynes’s masterwork was his General Theory of Employment, Interest, and Money , published in 1936.

^ Keynes, General Theory , pp.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ It was at this moment that Keynes published his General Theory.
  • Online Library of Liberty - 11: Stones into Bread, the Keynesian Miracle * - Planning for Freedom: Let the Market System Work. A Collection of Essays and Addresses 9 February 2010 15:015 UTC oll.libertyfund.org [Source type: Original source]

[6]

Concepts

.The multiplier dates to work in the 1890s by the Australian economist Alfred De Lissa, the Danish economist Julius Wulff, and the German American economist Nicholas Johannsen,[7] the latter being cited in a footnote of Keynes.^ Multiple economists came up with different variations and interpretations of Keynes’s work.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Main article: Marxian economics The Marxist school of economic thought comes from the work of German economist Karl Marx.
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ While Keynes’s theories did not influence the behavior of the average American, by the early 1960s economists had firmly ensconced the Keynesian paradigm in their profession.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

[8] .Nicholas Johannsen also proposed a theory of effective demand in the 1890s.^ Kregel: The multiplier and liquidity preference: two sides of the theory of effective demand in The Fundation of Keynesian Analysis (Barrere ed.
  • ECONOMICS 601 17 January 2010 5:10 UTC k.web.umkc.edu [Source type: FILTERED WITH BAYES]

^ In 1963 JFK proposed a massive tax cut to, in accordance with Keynesian theories, stimulate demand and push the economy back to full employment.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ So is Steinbrueck right in condemning proposals for deficit-financed fiscal stimuli in Europe and elsewhere to counteract the contraction of effective private demand?
  • Confessions of a crass Keynesian | Willem Buiter's Maverecon | FT.com 9 February 2010 15:015 UTC blogs.ft.com [Source type: News]

The paradox of thrift was stated in 1892 by John M. Robertson in his The Fallacy of Savings, in earlier forms by mercantilist economists since the 16th century, and similar sentiments date to antiquity:[9][10]
.Today these ideas, regardless of provenance, are referred to in academia under the rubric of "Keynesian economics", due to Keynes's role in consolidating, elaborating, and popularizing them.^ Today I will be talking about his economic theory, commonly referred to as "Keynesian Economics".
  • Dual Income No Kids: Keynesian Economics Overview 9 February 2010 15:015 UTC www.dinksfinance.com [Source type: General]

^ Keynesian Economics the economic teachings and doctrines associated with John Maynard Keynes Keynesian Economics definition on BNET » .
  • keynesian economics Resources | BNET 9 February 2010 15:015 UTC resources.bnet.com [Source type: News]

^ The heart of the debate over Keynes's radical ideas has been whether they could or should be reconciled with the older, neoclassical economic theory.
  • Struggle Over The Keynesian Heritage 9 February 2010 15:015 UTC www.maccvs.org [Source type: General]
  • Struggle Over The Keynesian Heritage - Dr. Paul Davidson Business Audio Books / Economics 9 February 2010 15:015 UTC www.talking-book-store.com [Source type: General]

Keynes and the Classics

Part of the series on
.Keynes sought to distinguish his theories from and oppose them to "classical economics," by which he meant the economic theories of David Ricardo and his followers, including John Stuart Mill, Alfred Marshall, Francis Ysidro Edgeworth, and Arthur Cecil Pigou.^ An economic theory originated by the British economist John Maynard Keynes and his followers.
  • Glossary | The Federal Reserve Bank of Minneapolis 17 January 2010 5:10 UTC www.minneapolisfed.org [Source type: FILTERED WITH BAYES]

^ Classical economics refers to the theories laid out by Adam Smith and David Ricardo in the eighteenth and nineteenth centuries, which emphasized the power of the “invisible hand” of the market to promote the division of labor and economic growth.
  • Keynesian vs. Neo-classical Economics – and what is Heterodox Economics? | Welker's Wikinomics Blog 9 February 2010 15:015 UTC welkerswikinomics.com [Source type: General]

^ Classical economics refers primarily to work before the 20th century by people such as Adam Smith , David Ricardo , and Jean-Baptiste Say .
  • economics@Everything2.com 17 January 2010 5:10 UTC www.everything2.com [Source type: FILTERED WITH BAYES]

.A central tenet of the classical view, known as Say's law, states that "supply creates its own demand". Say's Law can be interpreted in two ways.^ Forget about the laws of supply and demand.
  • Natural Born Conservative: Obama's Cluelessian Economics - Not Keynesian 17 January 2010 5:10 UTC larrymwalkerjr.blogspot.com [Source type: General]

^ The attack on Say's Law and the interpretation of money .
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

^ The school disagrees with classical economics and Say's Law that supply creates its own demand.

.First, the claim that the total value of output is equal to the sum of income earned in production is a result of a national income accounting identity, and is therefore indisputable.^ This is a national accounting identity.

^ Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

^ Here's the problem: As a matter of simple arithmetic , total spending in the economy is necessarily equal to total income (every sale is also a purchase, and vice versa).
  • Axiomatic Economics by Victor Aguilar: Austrian, Chicago and Keynesian Rebuttals to Aguilar 9 February 2010 15:015 UTC axiomaticeconomics.com [Source type: Original source]

.A second and stronger claim, however, that the "costs of output are always covered in the aggregate by the sale-proceeds resulting from demand" depends on how consumption and saving are linked to production and investment.^ Productive expenditure depends on saving .
  • depreciation « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Keynesianism « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Standing Keynesian GDP on Its Head: Saving Not Consumption as the Main Source of Spending « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]

^ But any such result will depend on additional saving and productive expenditure, not consumption expenditure.
  • depreciation « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Keynesianism « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Standing Keynesian GDP on Its Head: Saving Not Consumption as the Main Source of Spending « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]

^ The result, anyways, is savings without investment.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.In particular, Keynes argued that the second, strong form of Say's Law only holds if increases in individual savings exactly match an increase in aggregate investment.^ An increase in the demand to hold money is not an increase in savings.
  • The fallacies behind Keynesian dogma 9 February 2010 15:015 UTC www.brookesnews.com [Source type: Original source]

^ While influential 20th Century economist John Maynard Keynes would say it’s best to increase deficit spending in tough economic times, only 11% of American adults agree and think the nation needs to increase its deficit spending at this time.
  • Yahoo! Message Boards - Ford Motor Company (F) - Americans Reject Keynesian Economics- 9 February 2010 15:015 UTC messages.finance.yahoo.com [Source type: General]

^ Keynes showed, however, that Say's Law isn't true, because in a monetary economy people can try to accumulate cash rather than real goods.
  • Keynes: The Return of the Master by Robert Skidelsky | Book review | Books | The Observer 9 February 2010 15:015 UTC www.guardian.co.uk [Source type: News]

[11]
.Keynes sought to develop a theory that would explain determinants of saving, consumption, investment and production.^ Keynes then explains his theory of employment.
  • Keynesian Theory 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ This theory has important implications for life insurance products and annuities since their purchase requires foregoing a portion of current consumption in favor of savings and future financial security.
  • Keynesian economics Definition | Business Dictionaries from AllBusiness.com 9 February 2010 15:015 UTC www.allbusiness.com [Source type: FILTERED WITH BAYES]

^ It's no surprise there was little change in consumption and a reduction in private investment when nearly everything was geared towards state-financed war production.
  • Peter Foster: Keynesian quagmire - Full Comment 9 February 2010 15:015 UTC network.nationalpost.com [Source type: General]

.In that theory, the interaction of aggregate demand and aggregate supply determines the level of output and employment in the economy.^ Slumping aggregate demand brought the economy well below the full-employment level of output by 1933.
  • The Great Depression and Keynesian Economics | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]
  • The Great Depression and Keynesian Economics | Flat World Knowledge 17 January 2010 5:10 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ That is, for Keynesians, the money supply is only one determinant of aggregate demand.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

^ P is the general price level of consumers' goods, D C is the aggregate demand for consumers' goods and S C is the aggregate supply of consumers' goods.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

.Because of what he considered the failure of the “Classical Theory” in the 1930s, Keynes firmly objects to its main theory—adjustments in prices would automatically make demand tend to the full employment level.^ In effect, if the unemployment level is at 6 percent, the economy is considered to be at full employment.

^ The aggregate demand-price adjustment framework .
  • Using Spreadsheets to Explore Neoclassical Assumptions in a Keynesian Model (CHEER v14 n2) 9 February 2010 15:015 UTC www.economicsnetwork.ac.uk [Source type: Academic]

^ In "classical" economic theory—Keynes's term for the economics prior to General Theory (and specifically that of Arthur Pigou)—adjustments in prices would automatically make demand tend to the full employment level.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Neo-classical theory supports that the two main costs that shift demand and supply are labor and money.^ In the neo-classical theory, the two main costs are those of labor and money.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Pollin: Two theories of money supply endogeneity (JPKE 1991) .
  • ECONOMICS 601 17 January 2010 5:10 UTC k.web.umkc.edu [Source type: FILTERED WITH BAYES]

^ At the basis of their differences are questions dealing with the velocity (turnover) of money and the effect of changes in the money supply on the equilibrium rate of interest (the rate at which money demand equals money supply).
  • Keynesian economics Definition | Business Dictionaries from AllBusiness.com 9 February 2010 15:015 UTC www.allbusiness.com [Source type: FILTERED WITH BAYES]

.Through the distribution of the monetary policy, demand and supply can be adjusted.^ The new paradigm advocated an economy with full employment and shared prosperity, and gave government the critical role of regulating markets and adjusting monetary and fiscal policy to ensure levels of demand sufficient to generate full employment.
  • In name only | Comment is free | guardian.co.uk 17 January 2010 5:10 UTC www.guardian.co.uk [Source type: News]

^ Traditional Keynesians subscribe to a school of thought that favors macroeconomic stabilization and management of aggregate demand by government through changes to federal spending and tax policies.
  • Economicae K 9 February 2010 15:015 UTC www.unc.edu [Source type: FILTERED WITH BAYES]

^ An expansionary fiscal or monetary policy, or a combination of the two, would shift aggregate demand to the right as shown in Panel (a), ideally returning the economy to potential output.
  • The Great Depression and Keynesian Economics | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]
  • The Great Depression and Keynesian Economics | Flat World Knowledge 17 January 2010 5:10 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

.If there were more labor than demand for it, wages would fall until hiring began again.^ If there was more labor than demand for it, wages would fall until hiring began again.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Something tells me there is more to it than that.

^ As the real wage falls, firms will demand more labor.
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

.If there was too much saving, and not enough consumption, then interest rates would fall until people either cut their savings rate or started borrowing.^ If there was so much excess savings, why were interest rates so high in 1929?
  • Keynesian Theory 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ Federal reserve has done what it can: lowering interest rates to encourage people to borrow.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ Further, if wages and prices were falling, people would start to expect them to fall.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

Wages and spending

.During the Great Depression, the classical theory defined economic collapse as simply a lost incentive to produce, and the mass unemployment as a result of high and rigid real wages.^ As everyone knows, Keynesian economics got its start during the Great Depression.
  • Americans for a Free Republic 9 February 2010 15:015 UTC www.afr.org [Source type: Original source]

^ Unemployment was high and persistent, and contrary to the existing macroeconomic theory--classical economics.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ Mass unemployment was caused only by high and rigid real wages.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

[citation needed]
.To Keynes, the determination of wages is more complicated.^ To Keynes, the determination of wages is more complicated.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Thus on the question of the level of wages and their determination, Keynes placed the state at the centre of his concerns.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www2.cddc.vt.edu [Source type: Original source]

^ Another aspect worthy of note is Keynes’ view about the determination of wages.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www2.cddc.vt.edu [Source type: Original source]

First, he argued that it is not real but nominal wages that are set in negotiations between employers and workers, as opposed to a barter relationship. .Second, nominal wage cuts would be difficult to put into effect because of laws and wage contracts.^ What would happen to nominal wages?
  • TheMoneyIllusion » What happened to the Keynesian SRAS? 9 February 2010 15:015 UTC blogsandwikis.bentley.edu [Source type: General]

^ First, nominal wage cuts would be difficult to put into effect because of laws and wage contracts.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ If the employer could observe the state of nature and/or the worker's effort level, it would be possible to sign a fixed-wage contract in which the worker put forward the optimal level of effort, produced the optimal state-contingent output and received his reservation utility level.
  • John Quiggin - Conference Papers - Where is economics going? 17 January 2010 5:10 UTC www.uq.edu.au [Source type: Academic]

.Even classical economists admitted that these exist; unlike Keynes, they advocated abolishing minimum wages, unions, and long-term contracts, increasing labor-market flexibility.^ Even classical economists admitted that these exist; unlike Keynes, they advocated abolishing minimum wages, unions, and long-term contracts, increasing labor-market flexibility.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ But most U.S. workers arent minimum wage workers, nor are they in unions .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Their solution is to increase labor-market flexibility, i.e., by cutting wages, busting unions, and deregulating business.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.However, to Keynes, people will resist nominal wage reductions, even without unions, until they see other wages falling and a general fall of prices.^ Further, if wages and prices were falling, people would start to expect them to fall.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ However, to Keynes, people will resist nominal wage reductions, even without unions, until they see other wages falling and a general fall of prices.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ During the Depression, wages did not fall even though prices did.
  • Can someone explain to me supply side economics vs. Keynesian economics? - Yahoo! Answers 9 February 2010 15:015 UTC answers.yahoo.com [Source type: General]

.He also argued that to boost employment, real wages had to go down: nominal wages would have to fall more than prices.^ Wages are falling which will cause prices to fall more, which will cause wages to fall, etc.
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

^ The economy slows down and prices are falling.
  • Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy | Comment is free | guardian.co.uk 9 February 2010 15:015 UTC www.guardian.co.uk [Source type: News]

^ Further, if wages and prices were falling, people would start to expect them to fall.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.However, doing so would reduce consumer demand, so that the aggregate demand for goods would drop.^ However, doing so would reduce consumer demand, so that the aggregate demand for goods would drop.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ P is the general price level of consumers' goods, D C is the aggregate demand for consumers' goods and S C is the aggregate supply of consumers' goods.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

^ When consumer demand drops, production drops.
  • What Is Keynesian Economics? 9 February 2010 15:015 UTC www.wisegeek.com [Source type: Original source]

.This would in turn reduce business sales revenues and expected profits.^ This would in turn reduce business sales revenues and expected profits.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Businesses would come to expect these increases -- hence the term, rational expectations -- and would simply raise their prices by the anticipated amount.
  • A Review of Keynesian Theory 9 February 2010 15:015 UTC www.huppi.com [Source type: Original source]

^ The crux of the demonstration was the restatement of profits as sales revenue minus costs, and then the breakdown both of sales revenues and wage incomes into productive expenditure and consumption expenditure.
  • depreciation « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Keynesianism « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Standing Keynesian GDP on Its Head: Saving Not Consumption as the Main Source of Spending « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]

.Investment in new plants and equipment—perhaps already discouraged by previous excesses—would then become more risky, less likely.^ More new investment in new technology occurs.
  • The Problem with Keynesian Economics: A Critique from the Left | ItsYourTimes.com 9 February 2010 15:015 UTC www.itsyourtimes.com [Source type: Original source]

^ Investment in new plants and equipment—perhaps already discouraged by previous excesses—would then become more risky, less likely.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ This increase is net investment in plant and equipment.
  • depreciation « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Keynesianism « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]
  • Standing Keynesian GDP on Its Head: Saving Not Consumption as the Main Source of Spending « George Reisman’s Blog on Economics, Politics, Society, and Culture 17 January 2010 5:10 UTC georgereisman.com [Source type: FILTERED WITH BAYES]

.Instead of raising business expectations, wage cuts could make matters much worse.^ Instead of raising business expectations, wage cuts could make matters much worse.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ A significant branch of the literature on wage rigidities has focused on the possible existence of asymmetries that make wage cuts very rare or unlikely.
  • Sample Chapter for Galí, J.: Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework. 9 February 2010 15:015 UTC press.princeton.edu [Source type: Academic]

^ Businesses would come to expect these increases -- hence the term, rational expectations -- and would simply raise their prices by the anticipated amount.
  • A Review of Keynesian Theory 9 February 2010 15:015 UTC www.huppi.com [Source type: Original source]

.Further, if wages and prices were falling, people would start to expect them to fall.^ Further, if wages and prices were falling, people would start to expect them to fall.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Standard macro theory (as illustrated in the AS/AD graph in the new Cowen/Tabarrok textbook) says that if NGDP suddenly grows 8% below trend then there will be a sharp drop in RGDP. The severity of the drop is exactly what one would expect in a world of sticky wages (sticky relative to the fall in NGDP, not relative to the also sticky prices.
  • Eight Unanswerable Questions 17 January 2010 5:10 UTC wallstreetpit.com [Source type: Original source]

^ Businesses would come to expect these increases -- hence the term, rational expectations -- and would simply raise their prices by the anticipated amount.
  • A Review of Keynesian Theory 9 February 2010 15:015 UTC www.huppi.com [Source type: Original source]

.This could make the economy spiral downward as those who had money would simply wait as falling prices made it more valuable—rather than spending.^ The economy slows down and prices are falling.
  • Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy | Comment is free | guardian.co.uk 9 February 2010 15:015 UTC www.guardian.co.uk [Source type: News]

^ It’s a transfer of money from those who hoard it to those who spend it and create demand with it.
  • patrick.net » Keynesian Economic applied to a family 17 January 2010 5:10 UTC patrick.net [Source type: General]

^ But true randomness would make the economy less stable, not more so.
  • A Review of Keynesian Theory 9 February 2010 15:015 UTC www.huppi.com [Source type: Original source]

.As Irving Fisher argued in 1933, in his Debt-Deflation Theory of Great Depressions, deflation (falling prices) can make a depression deeper as falling prices and wages made pre-existing nominal debts more valuable in real terms.^ Wages are falling which will cause prices to fall more, which will cause wages to fall, etc.
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

^ As Irving Fisher argued in 1933, in his Debt-Deflation Theory of Great Depressions, deflation (falling prices) can make a depression deeper as falling prices and wages made pre-existing nominal debts more valuable in real terms.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ During the Depression, wages did not fall even though prices did.
  • Can someone explain to me supply side economics vs. Keynesian economics? - Yahoo! Answers 9 February 2010 15:015 UTC answers.yahoo.com [Source type: General]

Excessive saving

Classics on Saving and Investment.
To Keynes, excessive saving, i.e. saving beyond planned investment, was a serious problem, encouraging recession or even depression. .Excessive saving results if investment falls, perhaps due to falling consumer demand, over-investment in earlier years, or pessimistic business expectations, and if saving does not immediately fall in step, the economy would decline.^ Excessive saving results if investment falls, perhaps due to falling consumer demand, over-investment in earlier years, or pessimistic business expectations, and if saving does not immediately fall in step.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The decline would lead to reduced consumer demand.
  • Spotlight on Keynesian Economics by Murray N. Rothbard 9 February 2010 15:015 UTC www.lewrockwell.com [Source type: Original source]
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

^ The result, anyways, is savings without investment.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.The classical economists argued that interest rates would fall due to the excess supply of "loanable funds". The first diagram, adapted from the only graph in The General Theory, shows this process.^ Classical economists recognized, however, that the process would take time.
  • The Great Depression and Keynesian Economics | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]
  • The Great Depression and Keynesian Economics | Flat World Knowledge 17 January 2010 5:10 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ In this diagram, the vertical axis is the interest rate.

^ The first diagram, adapted from the only graph in The General Theory, shows this process.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.(For simplicity, other sources of the demand for or supply of funds are ignored here.^ (For simplicity, other sources of the demand for or supply of funds are ignored here.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The source of income growth is production, albeit in anticipation of demand, just as Adam Smith, David Ricardo, and other classicals have explained.
  • On the Mythology of the Keynesian Multiplier: Unmasking the Myth and the inadequacies of Some Earlier Criticisms - Focus on Economic Theory - John Maynard Keynes | American Journal of Economics and Sociology, The | Find Articles at BNET 9 February 2010 15:015 UTC findarticles.com [Source type: FILTERED WITH BAYES]

^ The absence of this entitlement to consume, on the other side of unproductive rents, is the source of inadequate aggregate demand, not literally stuffing money in a mattress.
  • On Keynesian Economics 9 February 2010 15:015 UTC cafehayek.com [Source type: Original source]

) .Assume that fixed investment in capital goods falls from "old I" to "new I" (step a).^ Assume that fixed investment in plant and equipment falls from "old I" to "new I" (step a).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ If the model allowed for the existence of investment, it would be clear that if baby-sitting consumption goes down, the demand for capital goods can be increased.
  • Krugman and His Economics of Keynesian Baby-Sitting - Manuel Lora - Mises Economics Blog 9 February 2010 15:015 UTC blog.mises.org [Source type: FILTERED WITH BAYES]

^ Excessive saving results if investment falls, perhaps due to falling consumer demand, over-investment in earlier years, or pessimistic business expectations, and if saving does not immediately fall in step.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Second (step b), the resulting excess of saving causes interest-rate cuts, abolishing the excess supply: so again we have saving (S) equal to investment.^ Second, Keynes re-analyzed the effect of the interest rate on investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Second (step b), the resulting excess of saving causes interest-rate cuts, abolishing the excess supply: so again we have saving (S) equal to investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ A higher interest rate increases saving and decreases investment.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

.The interest-rate (i) fall prevents that of production and employment.^ The interest-rate fall prevents that of production and employment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The supply of and demand for money (alone) determine the equilibrium rate of interest, which in turn determines the level of investment and hence the level of employment.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ This result is extremely interesting, since classical economists have always maintained that employment will only increase if real wage rates fall, and that large-scale unemployment can only persist if wage rates are prevented from falling by monopolistic interference in the labor market.
  • Spotlight on Keynesian Economics by Murray N. Rothbard 9 February 2010 15:015 UTC www.lewrockwell.com [Source type: Original source]
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

.Keynes had a complex argument against this laissez-faire response.^ Keynes had a complex argument against this laissez-faire response.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ It's hard enough to explain persuasively why the two conceptal arguments against Keynes are dubious despite their immediate appeal and demonstrable partial truth.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ In his book The End of Laissez-Faire, Keynes advocated concepts of not only various political and economic controls, but he also advocated political controls over the number of children allowed in families.
  • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

.The graph below summarizes his argument, assuming again that fixed investment falls (step A).^ The graph below summarizes his argument, assuming again that fixed investment falls (step A).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Assume that fixed investment in plant and equipment falls from "old I" to "new I" (step a).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Excessive saving results if investment falls, perhaps due to falling consumer demand, over-investment in earlier years, or pessimistic business expectations, and if saving does not immediately fall in step.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.First, saving does not fall much as interest rates fall, since the income and substitution effects of falling rates go in conflicting directions.^ I'd ask about what's going on with interest rates.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ Does the savings rate have further to rise?
  • The Catholic Church + The Keynesian Multiplier | Wandering the Oceans 9 February 2010 15:015 UTC www.sailblogs.com [Source type: Original source]

^ He does not understand what the rate of interest really is.
  • Recession and Recovery: Newsroom: The Independent Institute 9 February 2010 15:015 UTC www.independent.org [Source type: FILTERED WITH BAYES]

.Second, since planned fixed investment in plant and equipment is mostly based on long-term expectations of future profitability, that spending does not rise much as interest rates fall.^ Second, Keynes re-analyzed the effect of the interest rate on investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ How is this a long term fix.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ As the rate of interest falls, the liquidation value of debt rises.
  • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

So S and I are drawn as steep (inelastic) in the graph. .Given the inelasticity of both demand and supply, a large interest-rate fall is needed to close the saving/investment gap.^ Savings, Investment, Interest rate .
  • Economics Homework Help - Micro, Macro Economics | Economics Assignment Help - High School, College Students. 17 January 2010 5:10 UTC www.classof1.com [Source type: General]

^ A higher interest rate increases saving and decreases investment.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ Reduced investment demand puts downward pressure on the interest rate.
  • KEYNESIAN MYTHS 17 January 2010 5:10 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.As drawn, this requires a negative interest rate at equilibrium (where the new I line would intersect the old S line).^ In this version, a negative interest rate would be required for a full employment equilibrium.

^ Moreover, the attainment of equilibrium might actually require negative interest rates.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ As drawn, this requires a negative interest rate at equilibrium (where the new I line would intersect the old S line).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.However, this negative interest rate is not necessary to Keynes's argument.^ However, this negative interest rate is not necessary to Keynes's argument.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ From Wikipedia: Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches : * a reduction in interest rates.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

^ Austrian monetary theorists, who pay more attention to the interest rate than does Friedman and as much attention to it as did Keynes, have a different perspective on the interest-rate issue.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

Keynes on Saving and Investment.
.Third, Keynes argued that saving and investment are not the main determinants of interest rates, especially in the short run.^ Second, Keynes re-analyzed the effect of the interest rate on investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Third, Keynes argued that saving and investment are not the main determinants of interest rates, especially in the short run.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ In the short run, output and the real interest rate increase .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

.Instead, the supply of and the demand for the stock of money determine interest rates in the short run.^ That is, for Keynesians, the money supply is only one determinant of aggregate demand.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

^ In the short run, output and the real interest rate increase .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Aggregate Demand and Short-Run Aggregate Supply: 1929–1933 .
  • The Great Depression and Keynesian Economics | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]
  • The Great Depression and Keynesian Economics | Flat World Knowledge 17 January 2010 5:10 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

(This is not drawn in the graph.) .Neither changes quickly in response to excessive saving to allow fast interest-rate adjustment.^ Neither change quickly in response to excessive saving to allow fast interest-rate adjustment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Investment can be influenced by changes in interest rates.
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

^ The plans at the FDIC these days promise to save homeowners by turning 30-year mortgages into 40 years of paying the bank at lower interest rates.
  • Tomgram: Mike Davis, Keynesian Shock and Awe | TomDispatch 9 February 2010 15:015 UTC www.tomdispatch.com [Source type: News]

.Finally, because of fear of capital losses on assets besides money, Keynes suggested that there may be a "liquidity trap" setting a floor under which interest rates cannot fall.^ As the rate of interest falls, the liquidation value of debt rises.
  • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

^ Keynes amazingly attributes this last surge in interest rates to "fear."
  • Keynesian Theory 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ Finally, because of fear of capital losses on assets besides money, Keynes suggested that there may be a "liquidity trap" setting a floor under which interest rates cannot fall.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.While in this trap, interest rates are so low that any increase in money supply will cause bond-holders (fearing rises in interest rates and hence capital losses on their bonds) to sell their bonds to attain money (liquidity).^ Liquidity preference and the theory of interest and money.
  • Project MUSE - Subject Browse 9 February 2010 15:015 UTC muse.jhu.edu [Source type: Academic]

^ As the rate of interest falls, the liquidation value of debt rises.
  • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

^ When interest rates collapse and bond prices rise, she can then sell her bond and make capital gains.
  • Integrating the Keynesian Relationships 9 February 2010 15:015 UTC cruel.org [Source type: Academic]

.In the diagram, the equilibrium suggested by the new I line and the old S line cannot be reached, so that excess saving persists.^ In the diagram, the equilibrium suggested by the new I line and the old S line cannot be reached, so that excess saving persists.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The graph depicts an increase (that is, right-shift) in demand from D 1 to D 2 along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S).
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ However, if the New Keynesians had the following in mind, then, I suggest, there is a problem which has nothing to do with ‘general equilibrium theory’ as found in the so-called ‘elegant’ part of the literature.
  • John Quiggin » What went wrong with New Keynesian macro ? 9 February 2010 15:015 UTC johnquiggin.com [Source type: FILTERED WITH BAYES]

.Some (such as Paul Krugman) see this latter kind of liquidity trap as prevailing in Japan in the 1990s.^ Japan's liquidity trap .
  • Return of Depression Economics, Keynesian theory, monetary policy, Asian contagion 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ Some (such as Paul Krugman) see this latter kind of liquidity trap as prevailing in Japan in the 1990s.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Krugman calls this the “liquidity trap” .
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

Most economists agree that nominal interest rates cannot fall below zero, however, some economists (particularly those from the Chicago school) reject the existence of a liquidity trap.
.Even if the liquidity trap does not exist, there is a fourth (perhaps most important) element to Keynes's critique.^ Contrary to Keynes assertions, the liquidity trap does not exist.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Liquidity traps ensnaring currency existed only in Keynes’s imagination.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Even if this "trap" does not exist, there is a fourth element to Keynes's critique (perhaps the most important part).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Saving involves not spending all of one's income.^ Saving involves not spending all of one's income.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ This is the paradox of thrift where though it may be rational for an individual to save more, if everyone saves more the circular flow of spending and incomes contracts and everyone is made worse off.
  • Peter Foster: Keynesian quagmire - Full Comment 9 February 2010 15:015 UTC network.nationalpost.com [Source type: General]

^ Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

.It thus means insufficient demand for business output, unless it is balanced by other sources of demand, such as fixed investment.^ It thus means insufficient demand for business output, unless it is balanced by other sources of demand, such as fixed investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Also, until recently most of the developed world (other than Japan) had been relatively immune to significant business cycle swings, thus dampening the demand for research on countercyclical fiscal policies in industrial nations.
  • Keynesian Fiscal Stimulus Policies Stimulate Debt--Not the Economy 9 February 2010 15:015 UTC www.heritage.org [Source type: FILTERED WITH BAYES]

^ And there is a massive abuse of the true meaning of free market words such as "trade, investment, and spending" to hide the involuntary nature of government projects.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

.Thus, excessive saving corresponds to an unwanted accumulation of inventories, or what classical economists called a general glut.^ Thus, excessive saving corresponds to an unwanted accumulation of inventories, or what classical economists called a "general glut".
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Eighteenth- and nineteenth-century economists are generally lumped together as adherents to the classical school, but their views were anything but uniform.
  • The Great Depression and Keynesian Economics | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]
  • The Great Depression and Keynesian Economics | Flat World Knowledge 17 January 2010 5:10 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ Of all the so called centrist middle of the road or left economists not one is discussing, save perhaps Roubini is discussing nationalization and a major cleanup of toxic banks.
  • The greatness of Keynes … - Paul Krugman Blog - NYTimes.com 17 January 2010 5:10 UTC krugman.blogs.nytimes.com [Source type: General]

[12] .This pile-up of unsold goods and materials encourages businesses to decrease both production and employment.^ This pile-up of unsold goods and materials encourages businesses to decrease both production and employment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ So consumption goods producers see demand for their goods decrease, and reduce production.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ A primary feature of such conditions is the extent and nature of business-to-business transactions, from raw materials to finished product (a process that typically takes many years).
  • IEA Blog » Keynesianism 9 February 2010 15:015 UTC blog.iea.org.uk [Source type: FILTERED WITH BAYES]

.This in turn lowers people's incomes—and saving, causing a leftward shift in the S line in the diagram (step B).^ This in turn lowers people's incomes—and saving, causing a leftward shift in the S line in the diagram (step B).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ This reduces the incomes of those who were formerly producing these particular goods and services, causing them in turn to plan less spending.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

^ When such an imbalance exists, the normal response is to lower interest rates such that it shifts the incentive to greater borrowing and less saving.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.For Keynes, the fall in income did most of the job by ending excessive saving and allowing the loanable funds market to attain equilibrium.^ For Keynes, the fall in income did most of the job ending excessive saving and allowing the loanable funds market to attain equilibrium.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Excessive saving To Keynes, excessive saving, i.e.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Keynes was interested in the level of national income and the volume of employment rather than in the equilibrium of the firm or the allocation of resources .
  • economics :: Keynesian economics -- Britannica Online Encyclopedia 17 January 2010 5:10 UTC www.britannica.com [Source type: Reference]

.Instead of interest-rate adjustment solving the problem, a recession does so.^ Austrian: "The problem is interest rates are too low."
  • Guest Post: Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: Original source]

^ Instead of interest-rate adjustment solving the problem, a recession does so.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Austrian monetary theorists, who pay more attention to the interest rate than does Friedman and as much attention to it as did Keynes, have a different perspective on the interest-rate issue.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.Thus in the diagram, the interest-rate change is small.^ In this diagram, the vertical axis is the interest rate.

^ Investment can be influenced by changes in interest rates.
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

^ Thus in the diagram, the interest-rate change is small.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Whereas the classical economists assumed that the level of output and income was constant and given at any one time (except for short-lived deviations), Keynes saw this as the key variable that adjusted to equate saving and investment.^ Whereas the classical economists assumed that the level of output and income was constant and given at any one time (except for short-lived deviations), Keynes saw this as the key variable that adjusted to equate saving and investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ But equating savings with investment is confusing.
  • How I Became A Keynesian | The New Republic 9 February 2010 15:015 UTC www.tnr.com [Source type: Original source]

^ Saving was thus a residual, varying in amount with changes in the level of income.
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

.Finally, a recession undermines the business incentive to engage in fixed investment.^ Finally, a recession undermines the business incentive to engage in fixed investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ It thus means insufficient demand for business output, unless it is balanced by other sources of demand, such as fixed investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ In the classical model, the supply of funds (saving) determined the amount of fixed business investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.With falling incomes and demand for products, the desired demand for factories and equipment (not to mention housing) will fall.^ With falling incomes and demand for products, the desired demand for factories and equipment (not to mention housing) will fall.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ In situations with excess capital stock (some machinery and equipment sits idle), the demand for labour schedule might not be the derivative of the aggregate production function with respect to labour.
  • Egwald Economics: Macroeconomics - The Keynesian AD-AS Model 9 February 2010 15:015 UTC www.egwald.ca [Source type: Academic]

^ Because higher desired savings will lead to an economic slump, which will reduce income and also reduce investment demand; since in the end savings and investment are always equal, the total volume of savings must actually fall!
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

.This accelerator effect would shift the I line to the left again, a change not shown in the diagram above.^ This accelerator effect would shift the I line to the left again, a change not shown in the diagram above.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ An adverse oil price shock shifts the FE line to the left .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ This in turn lowers people's incomes—and saving, causing a leftward shift in the S line in the diagram (step B).
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.This recreates the problem of excessive saving and encourages the recession to continue.^ This recreates the problem of excessive saving and encourages the recession to continue.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ In sum, to Keynes there is interaction between excess supplies in different markets, as unemployment in labor markets encourages excessive saving—and vice-versa.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ My survey produced an interesting anomaly— several respondents felt that excessive consumer spending was the primary cause of the economic problems we face today, and that spending is not to be encouraged.
  • Pajamas Media » Myth: Government Spending ‘Stimulates’ the Economy 9 February 2010 15:015 UTC pajamasmedia.com [Source type: FILTERED WITH BAYES]

.In sum, to Keynes there is interaction between excess supplies in different markets, as unemployment in labor markets encourages excessive saving—and vice-versa.^ In sum, to Keynes there is interaction between excess supplies in different markets, as unemployment in labor markets encourages excessive saving—and vice-versa.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ It is implied that there are no differences between them.
  • Online Library of Liberty - 11: Stones into Bread, the Keynesian Miracle * - Planning for Freedom: Let the Market System Work. A Collection of Essays and Addresses 9 February 2010 15:015 UTC oll.libertyfund.org [Source type: Original source]

^ There is a difference between services and assets.
  • Keynesian Economics Is Wrong: Bigger Government Is Not Stimulus // Current 9 February 2010 15:015 UTC current.com [Source type: Original source]

.Rather than prices adjusting to attain equilibrium, the main story is one of quantity adjustment allowing recessions and possible attainment of underemployment equilibrium.^ Rather than prices adjusting to attain equilibrium, the main story is one of quantity adjustment allowing recessions and possible attainment of underemployment equilibrium.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Drawing from the first book, it allows for a natural rate of interest from which the bank rate can diverge, and drawing from the second book, it allows for the resulting disequilibrium to play itself out through quantity adjustments rather than through price adjustments.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ At each step, the increase in spending is smaller than in the previous step, so that the multiplier process tapers off and allows the attainment of an equilibrium.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

Active fiscal policy

.As noted, the classicals wanted to balance the government budget.^ It is worth noting that it was balancing the budget that was seen to have made the all-important difference.
  • Quadrant Online - The Dangers of Keynesian Economics 17 January 2010 5:10 UTC www.quadrant.org.au [Source type: Original source]

^ For completeness, we should note here that the Keynesian theory of policy, as developed in the 1940s and 1950s, included the balanced-budget multiplier.
  • Buchanan: Collected Works, Buchanan and Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes, Chapter 3 | Library of Economics and Liberty 17 January 2010 5:10 UTC www.econlib.org [Source type: Original source]

^ This means the job of government is to make it so that people balance the risks to growth and inflation, and, on net, buy when they want to buy, and save when they want to save.
  • How Keynesian Stimulus Works | The Agonist 9 February 2010 15:015 UTC agonist.org [Source type: Original source]

.To Keynes, this would exacerbate the underlying problem: following either policy would raise saving (broadly defined) and thus lower the demand for both products and labor.^ To Keynes, this would exacerbate the underlying problem: following either policy would raise saving (broadly defined) and thus lower the demand for both products and labor.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Governments might use this technique to "persuade" labor not to strike, businesses not to raise prices, businesses not to lower wages, countries to increase oil production, or other central banks to inflate their currencies to bolster their own currency.

^ It is highly unlikely that the Federal Reserve led by a re-appointed Professor Bernanke would follow a policy of a stable dollar.

.For example, Keynesians see Herbert Hoover's June 1932 tax increase as making the Depression worse.^ For example, Keynesians see Herbert Hoover's June 1932 tax hike as making the Depression worse.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ This counters the R position - "Higher taxes will make a depression worse."
  • How Keynesian Stimulus Works | The Agonist 9 February 2010 15:015 UTC agonist.org [Source type: Original source]

^ Keynesians reject Ricardian equivalence, believing that the reduction in taxes increases consumption spending, reducing desired national saving and shifting the IS curve up.
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

[citation needed]
.Keynes′ ideas influenced Franklin D. Roosevelt's view that insufficient buying-power caused the Depression.^ Keynes's ideas influenced Franklin D. Roosevelt's view that insufficient buying-power caused the Depression.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ A final question for the Keynes converts: How is buying something you might not need, with money you don't have, and probably can't pay back a good idea?
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ If the economy was viewed as a system, Keynes argued, it would become apparent that the root cause of the depression was an insufficiency in total demand.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

.During his presidency, Roosevelt adopted some aspects of Keynesian economics, especially after 1937, when, in the depths of the Depression, the United States suffered from recession yet again following fiscal contraction.^ As everyone knows, Keynesian economics got its start during the Great Depression.
  • Americans for a Free Republic 9 February 2010 15:015 UTC www.afr.org [Source type: Original source]

^ During his presidency, he adopted some aspects of Keynesian economics, especially after 1937, when, in the depths of the Depression, the United States suffered from recession yet again.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ This is especially true in the United States.
  • small dead animals: The Keynesian Nightmare 17 January 2010 5:10 UTC www.smalldeadanimals.com [Source type: Original source]

.But to many the true success of Keynesian policy can be seen at the onset of World War II, which provided a kick to the world economy, removed uncertainty, and forced the rebuilding of destroyed capital.^ World War II did.
  • Old Keynesian Dogs, Old Fiscal Tricks by Gary North 17 January 2010 5:10 UTC www.lewrockwell.com [Source type: Original source]

^ But to many the true success of Keynesian policy can be seen at the onset of World War II, which provided a kick to the world economy, removed uncertainty, and forced the rebuilding of destroyed capital.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ With the exception of a small number of keen-sighted men, all Britons supported the policy which finally made it possible for the Nazis to start the Second World War.
  • Online Library of Liberty - 11: Stones into Bread, the Keynesian Miracle * - Planning for Freedom: Let the Market System Work. A Collection of Essays and Addresses 9 February 2010 15:015 UTC oll.libertyfund.org [Source type: Original source]

.Keynesian ideas became almost official in social-democratic Europe after the war and in the U.S. in the 1960s.^ Keynesian ideas became almost official in social-democratic Europe after the war and in the U.S. in the 1960s.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ As already noted, Keynesianism became the fundamental element in post-war social democratic ideology.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www.marxists.org [Source type: FILTERED WITH BAYES]

^ Thus, in the "cold war" against the Soviet Union, the working classes of the social-democratic states were first "nationals" and only then "workers".
  • SEATINI Articles 9 February 2010 15:015 UTC www.seatini.org [Source type: Original source]

.Keynes′ theory suggested that active government policy could be effective in managing the economy.^ Keynes's theory suggested that active government policy could be effective in managing the economy.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Monetarism had an ideological as well as a practical appeal: monetary policy does not, at least on the surface, imply as much government intervention in the economy as other measures.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The textbook introduced generations of students to the revolutionary ideas of John Maynard Keynes , the British economist who in the 1930s developed the theory that modern market economies could become trapped in depression and would then need a strong push from government spending or tax cuts, in addition to lenient monetary policy, to restore them.
  • Paul A. Samuelson, Who Reshaped Economics, Dies at 94 - Obituary (Obit) - NYTimes.com 17 January 2010 5:10 UTC www.nytimes.com [Source type: News]

.Rather than seeing unbalanced government budgets as wrong, Keynes advocated what has been called countercyclical fiscal policies, that is policies which acted against the tide of the business cycle: deficit spending when a nation's economy suffers from recession or when recovery is long-delayed and unemployment is persistently high—and the suppression of inflation in boom times by either increasing taxes or cutting back on government outlays.^ Regulation by the government 2)Closing the budget deficit after the recession is over (through spending cuts and tax hikes) .
  • All Keynesians Now? | WBUR and NPR - On Point with Tom Ashbrook 9 February 2010 15:015 UTC www.onpointradio.org [Source type: General]

^ Although tax cuts for individuals and businesses can help, government spending will have to do the heavy lifting.
  • Defense Spending as Stimulus - WSJ.com 9 February 2010 15:015 UTC online.wsj.com [Source type: General]

^ See also fiscal policy.
  • Glossary | The Federal Reserve Bank of Minneapolis 17 January 2010 5:10 UTC www.minneapolisfed.org [Source type: FILTERED WITH BAYES]

.He argued that governments should solve problems in the short run rather than waiting for market forces to do it in the long run, because "in the long run, we are all dead."^ And there we have the short run-long run conundrum.
  • Can the US economy afford a Keynesian stimulus? | Willem Buiter's Maverecon | FT.com 9 February 2010 15:015 UTC blogs.ft.com [Source type: FILTERED WITH BAYES]

^ But as Keynes himself once said, ‘In the long run we are all dead’.
  • Sorting Through Keynesian Rubble | c2c Journal 9 February 2010 15:015 UTC www.c2cjournal.ca [Source type: FILTERED WITH BAYES]

^ He argued that governments should solve short-term problems rather than waiting for market forces to do it, because "in the long run, we are all dead."
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

[13]
.This contrasted with the classical and neoclassical economic analysis of fiscal policy.^ Analysis of current economic conditions and policy .
  • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

^ This contrasted with the classical and neoclassical economic analysis of fiscal policy.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The implications of analysis for economic policy .
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

.Fiscal stimulus (deficit spending) could actuate production.^ Fiscal stimulus (deficit spending) could actuate production.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Proponents of extra increased spending as Keynesian stimulus may take comfort in this result, but then they must also acknowledge that the authors find "a deficit-financed tax cut is the best fiscal policy to stimulate the economy."
  • Keynesian Fiscal Stimulus Policies Stimulate Debt--Not the Economy 9 February 2010 15:015 UTC www.heritage.org [Source type: FILTERED WITH BAYES]

^ Tags: Barack Obama , fiscal stimulus , high-speed rail , public choice theory , public spending , Richard Wellings Posted in Environment and transport , Fiscal policy .
  • IEA Blog » fiscal stimulus 17 January 2010 5:10 UTC blog.iea.org.uk [Source type: FILTERED WITH BAYES]

.But to these schools, there was no reason to believe that this stimulation would outrun the side-effects that "crowd out" private investment: first, it would increase the demand for labor and raise wages, hurting profitability; Second, a government deficit increases the stock of government bonds, reducing their market price and encouraging high interest rates, making it more expensive for business to finance fixed investment.^ "In the Keynesian model, government deficits and private investment have the same economic effect."
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

^ Second, Keynes re-analyzed the effect of the interest rate on investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The old wage rate is now too high.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.Thus, efforts to stimulate the economy would be self-defeating.^ Thus, efforts to stimulate the economy would be self-defeating.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ However the government chooses to stimulate demand, the effects on the economy would greatly exceed the initial government expenditures.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ A substantial short-term rise in spending on defense and intelligence would both stimulate our economy and strengthen our nation's security.
  • Defense Spending as Stimulus - WSJ.com 9 February 2010 15:015 UTC online.wsj.com [Source type: General]

.The Keynesian response is that such fiscal policy is only appropriate when unemployment is persistently high, above the non-accelerating inflation rate of unemployment (NAIRU).^ As such, unemployment or inflation might persist indefinitely...
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ (This level of output corresponds to the Non-Accelerating Inflation Rate of Unemployment, NAIRU, or the "natural" rate of unemployment or the full-employment unemployment rate.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

^ Can government fiscal policy reduce unemployment?
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

.In that case, crowding out is minimal.^ In that case, crowding out is minimal.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Further, private investment can be "crowded in": fiscal stimulus raises the market for business output, raising cash flow and profitability, spurring business optimism.^ Further, private investment can be "crowded in": fiscal stimulus raises the market for business output, raising cash flow and profitability, spurring business optimism.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Further, the capital savings required for real investment will have been consumed; businesses will find it more difficult to acquire resources as those resources will already have been depleted.
  • On Spending and Keynesian Displacement - TCS Daily 9 February 2010 15:015 UTC tcsdaily.com [Source type: Original source]
  • On Spending and Keynesian Displacement - TCS Daily 9 February 2010 15:015 UTC www.pheedcontent.com [Source type: Original source]

^ If the prospects for business profits are very gloomy, current investment plans may be to allow existing capital to wear out rather than replace it.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

.To Keynes, this accelerator effect meant that government and business could be complements rather than substitutes in this situation.^ To Keynes, this accelerator effect meant that government and business could be complements rather than substitutes in this situation.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ For Keynes, in other words, it is consumption, rather than thrift, that promotes economic growth.
  • How I Became A Keynesian | The New Republic 9 February 2010 15:015 UTC www.tnr.com [Source type: Original source]

^ Keynes's theory suggested that active government policy could be effective in managing the economy.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Second, as the stimulus occurs, gross domestic product rises, raising the amount of saving, helping to finance the increase in fixed investment.^ This increase in production requires more investment.
  • Economics Interactive 9 February 2010 15:015 UTC www.unc.edu [Source type: FILTERED WITH BAYES]
  • Economics Interactive 17 January 2010 5:10 UTC www.unc.edu [Source type: FILTERED WITH BAYES]

^ Second, as the stimulus occurs, gross domestic product rises, raising the amount of saving, helping to finance the increase in fixed investment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ They cannot play the fiscal stimulus game because their borrowing capacity is limited: external finance is drying up and domestic financial markets cannot absorb the increase in public debt without a sharp rise in interest rates.
  • Dani Rodrik's weblog: Some unpleasant Keynesian arithmetic 9 February 2010 15:015 UTC rodrik.typepad.com [Source type: General]

.Finally, government outlays need not always be wasteful: government investment in public goods that will not be provided by profit-seekers will encourage the private sector's growth.^ Finally, government outlays need not always be wasteful: government investment in public goods that will not be provided by profit-seekers will encourage the private sector's growth.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ It's the private sector, which controls government that is the problem.
  • Keynesian Economics Is Wrong: Bigger Government Is Not Stimulus // Current 9 February 2010 15:015 UTC current.com [Source type: Original source]

^ On the contrary, government sent veterans to school (GI bill) and encouraged the growth of the construction industry and the transition to suburban life by backing low cost loans for them.
  • Being beastly about FDR and the Keynesian narrative | Samizdata.net 9 February 2010 15:015 UTC www.samizdata.net [Source type: FILTERED WITH BAYES]

.That is, government spending on such things as basic research, public health, education, and infrastructure could help the long-term growth of potential output.^ That is, government spending on such things as basic research, public health, education, and infrastructure could help the long-term growth of potential output.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Long term deficit spending leads to government takeover- its as simple as that.
  • Prepare for a Keynesian Hangover - Corvette Forum 9 February 2010 15:015 UTC forums.corvetteforum.com [Source type: FILTERED WITH BAYES]

^ Long term, that’s a good thing.

.A Keynesian economist might point out that classical and neoclassical theory does not explain why firms acting as "special interests" to influence government policy are assumed to produce a negative outcome, while those same firms acting with the same motivations outside of the government are supposed to produce positive outcomes.^ Milton Friedman was a Keynesian not a classical economist.
  • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

^ But that misses the point, which is that since such a policy is entirely consistent with Keynesian theory, so why not?
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ The government does not produce anything.
  • Krugman Falls into the Keynesian Accounting Trap - Mises Daily - Mises Economics Blog 9 February 2010 15:015 UTC blog.mises.org [Source type: FILTERED WITH BAYES]

.Libertarians counter that because both parties consent, free trade increases net happiness, but government imposes its will by force, decreasing happiness.^ And there is a massive abuse of the true meaning of free market words such as "trade, investment, and spending" to hide the involuntary nature of government projects.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ In regards to the idea that trade liberalization will increase aggregate demand, both you and Paul Krugman are wrong and Robert Murphy is correct.
  • Krugman Falls into the Keynesian Accounting Trap - Mises Daily - Mises Economics Blog 9 February 2010 15:015 UTC blog.mises.org [Source type: FILTERED WITH BAYES]

^ Free Trade means both nations eradicate all barriers not the US allowing free access while other nations retain barriers.
  • Krugman Falls into the Keynesian Accounting Trap - Mises Daily - Mises Economics Blog 9 February 2010 15:015 UTC blog.mises.org [Source type: FILTERED WITH BAYES]

.Therefore firms that manipulate the government do net harm, while firms that respond to the free market do net good.^ And there is a massive abuse of the true meaning of free market words such as "trade, investment, and spending" to hide the involuntary nature of government projects.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ "Free market capitalism" in which state and government don't play any significant role or are eliminated is a myth and fantasy land of libertarian and similar ideologies.
  • Guest Post: Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: Original source]

^ Keynnesianism is often represented as equivalent to government spending, leading to "socialism" as governmental control replacing the omniscient and omnipotent mechanism of the "free market."
  • How Keynesian Stimulus Works | The Agonist 9 February 2010 15:015 UTC agonist.org [Source type: Original source]

.In Keynes' theory, there must be significant slack in the labor market before fiscal expansion is justified.^ Labor market theories are based on competitive markets.
  • Keynesian Theory 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ In Keynes' theory, there must be significant slack in the labor market before fiscal expansion is justified.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ In sum, to Keynes there is interaction between excess supplies in different markets, as unemployment in labor markets encourages excessive saving—and vice-versa.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.Both conservative and some neoliberal economists question this assumption, unless labor unions or the government "meddle" in the free market, creating persistent supply-side or classical unemployment.^ Both conservative and some neoliberal economists question this assumption, unless labor unions or the government "meddle" in the free market, creating persistent supply-side or classical unemployment.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ With minor additions and adjustments, its typical equations can be used as the basis of a classical, a monetarist, or a supply-side model.
  • The Paradox of Thrift: RIP� 9 February 2010 15:015 UTC www.cato.org [Source type: FILTERED WITH BAYES]

^ This result is extremely interesting, since classical economists have always maintained that employment will only increase if real wage rates fall, and that large-scale unemployment can only persist if wage rates are prevented from falling by monopolistic interference in the labor market.
  • Spotlight on Keynesian Economics by Murray N. Rothbard 9 February 2010 15:015 UTC www.lewrockwell.com [Source type: Original source]
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

.Their solution is to increase labor-market flexibility, e.g., by cutting wages, busting unions, and deregulating business.^ Their solution is to increase labor-market flexibility, i.e., by cutting wages, busting unions, and deregulating business.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ The proper solution was to cut wages.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Governments might use this technique to "persuade" labor not to strike, businesses not to raise prices, businesses not to lower wages, countries to increase oil production, or other central banks to inflate their currencies to bolster their own currency.

.Deficit spending is not Keynesianism.^ Tags: Barack Obama , budget deficit , Keynesianism , public spending , Richard Wellings , socialism Posted in Fiscal policy , Political economy .
  • IEA Blog » Keynesianism 9 February 2010 15:015 UTC blog.iea.org.uk [Source type: FILTERED WITH BAYES]

^ Instead, the Keynesians argue for deficit spending to increase demand.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Keynesianism has been used to justify wasteful spending, massive deficits, and one after another scheme to redistribute wealth from those who would save it to those who would spend it.
  • The Paradox of Thrift: RIP� 9 February 2010 15:015 UTC www.cato.org [Source type: FILTERED WITH BAYES]

.March 2009" style="white-space:nowrap;">[citation needed] Keynesianism recommends counter-cyclical policies to smooth out fluctuations in the business cycle.^ A. Keynesian business cycle theory .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ What is the Keynesian theory of the business cycle?
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ In the Keynesian view, the classical policy exacerbates the business cycle.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

.March 2009" style="white-space:nowrap;">[citation needed] An example of a counter-cyclical policy is raising taxes to cool the economy and to prevent inflation when there is abundant demand-side growth, and engaging in deficit spending on labor-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns.^ Is there a growth imperative in capitalist economies?
  • IDEAS: Journal of Post Keynesian Economics, M.E. Sharpe, Inc. 9 February 2010 15:015 UTC ideas.repec.org [Source type: Academic]

^ The economy needed a cooling off.
  • Keynesian Economics in the 1960s and 1970s | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ With the new investment, there will be growth in the economy.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.March 2009" style="white-space:nowrap;">[citation needed] Classical economics, on the other hand, argues that one should cut taxes when there are budget surpluses, and cut spending—or, less likely, increase taxes—during economic downturns.^ On the other hand, Keynesianism encourages increased deficits during downturns.
  • Keynesian economics 9 February 2010 15:015 UTC www.martinfrost.ws [Source type: FILTERED WITH BAYES]

^ Who can afford even a temporary tax cut or spending increase?
  • Confessions of a crass Keynesian | Willem Buiter's Maverecon | FT.com 9 February 2010 15:015 UTC blogs.ft.com [Source type: News]

^ When will the future spending cuts or tax increases have to be implemented?
  • Confessions of a crass Keynesian | Willem Buiter's Maverecon | FT.com 9 February 2010 15:015 UTC blogs.ft.com [Source type: News]

.March 2009" style="white-space:nowrap;">[citation needed] Keynesian economists believe that adding to profits and incomes during boom cycles through tax cuts, and removing income and profits from the economy through cuts in spending and/or increased taxes during downturns, tends to exacerbate the negative effects of the business cycle.^ A. Keynesian business cycle theory .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Who can afford even a temporary tax cut or spending increase?
  • Confessions of a crass Keynesian | Willem Buiter's Maverecon | FT.com 9 February 2010 15:015 UTC blogs.ft.com [Source type: News]

^ What is the Keynesian theory of the business cycle?
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.March 2009" style="white-space:nowrap;">[citation needed] This effect is especially pronounced when the government controls a large fraction of the economy, and is therefore one reason fiscal conservatives advocate a much smaller government.^ The new paradigm advocated an economy with full employment and shared prosperity, and gave government the critical role of regulating markets and adjusting monetary and fiscal policy to ensure levels of demand sufficient to generate full employment.
  • In name only | Comment is free | guardian.co.uk 17 January 2010 5:10 UTC www.guardian.co.uk [Source type: News]

^ After 1929, when private enterprises and free markets yielded the Great Depression, business largely shifted to advocate massive government interventions to “fix” the broken economy (as it does again today).
  • Dissident Voice : Flip-flops of Economics 17 January 2010 5:10 UTC dissidentvoice.org [Source type: FILTERED WITH BAYES]

^ The result was a potent set of arguments in favour of government intervention in the economy which supported the growth of government in the postwar period, and remain as the basis of much of the actual operations of government today.
  • John Quiggin - Conference Papers - Where is economics going? 17 January 2010 5:10 UTC www.uq.edu.au [Source type: Academic]

[citation needed]

"Multiplier effect" and interest rates

Two aspects of Keynes' model had implications for policy:
.First, there is the "Keynesian multiplier", first developed by Richard F. Kahn in 1931. Exogenous increases in spending, such as an increase in government outlays, increases total spending by a multiple of that increase.^ What is the multiplier from government spending?
  • John Quiggin » Refuted/obsolete economic doctrines #7: New Keynesian macroeconomics 9 February 2010 15:015 UTC johnquiggin.com [Source type: FILTERED WITH BAYES]

^ As such, there is no increase in what Keynesians refer to as aggregate demand.
  • Pajamas Media » Myth: Government Spending ‘Stimulates’ the Economy 9 February 2010 15:015 UTC pajamasmedia.com [Source type: FILTERED WITH BAYES]

^ The Keynesian witch-doctors will retort that when a man spends now, it allows the next guy to spend, and then the next, and so on until finally someone down the line is able to buy from the first man.
  • On Spending and Keynesian Displacement - TCS Daily 9 February 2010 15:015 UTC tcsdaily.com [Source type: Original source]
  • On Spending and Keynesian Displacement - TCS Daily 9 February 2010 15:015 UTC www.pheedcontent.com [Source type: Original source]

A government could stimulate a great deal of new production with a modest outlay if:
  1. The people who receive this money then spend most on consumption goods and save the rest.
  2. This extra spending allows businesses to hire more people and pay them, which in turn allows a further increase consumer spending.
This process continues. .At each step, the increase in spending is smaller than in the previous step, so that the multiplier process tapers off and allows the attainment of an equilibrium.^ The movement along the aggregate expenditures line not only restores equilibrium it also generates the multiplier process.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ "For since consumers will spend less than the increase in aggregate supply price when employment is increased, the increased employment will prove unprofitable unless there is an increase in investment to fill the gap."
  • Keynesian Theory 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ (If the average saving rate is 10%, the multiplier, which gives the total $$ increase in spending from $1 of extra spending, would be the inverse of that saving rate, i.e.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.This story is modified and moderated if we move beyond a "closed economy" and bring in the role of taxation: the rise in imports and tax payments at each step reduces the amount of induced consumer spending and the size of the multiplier effect.^ The model shows that a change in autonomous expenditure leads to a larger-sized change in national income, a relationship known as the multiplier effect.
  • Keynesian Cross Diagram - Wolfram Demonstrations Project 9 February 2010 15:015 UTC demonstrations.wolfram.com [Source type: FILTERED WITH BAYES]

^ In the Great Depression and beyond, Keynesian economics had government rolling out massive spending to stimulate slumping economies.
  • All Keynesians Now? | WBUR and NPR - On Point with Tom Ashbrook 9 February 2010 15:015 UTC www.onpointradio.org [Source type: General]

^ A loss of investor confidence would have the opposite effect and the desired amount of investment spending would be less at all interest rates.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

.Second, Keynes re-analyzed the effect of the interest rate on investment.^ The second is the effect of a lower rate of interest on the consumption function, an effect that has come to be called the Keynes effect.

^ In his view interest rates have no substantial effects on investment either.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ The re-interpretation of the rate of interest .
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

.In the classical model, the supply of funds (saving) determined the amount of fixed business investment.^ In the classical model, investment increases by the same amount that consumption decreases.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ The supply of and demand for money (alone) determine the equilibrium rate of interest, which in turn determines the level of investment and hence the level of employment.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ In what follows, we will begin by sketching an explanation of how the determination of the level of output and employment was explained in a simple "fixed price-level" Keynesian macro-economic model.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

.That is, since all savings was placed in banks, and all business investors in need of borrowed funds went to banks, the amount of savings determined the amount that was available to invest.^ The amount invested is completely independent of the interest rate or the amount saved.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ A loss of investor confidence would have the opposite effect and the desired amount of investment spending would be less at all interest rates.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

^ Price Manipulation See Manipulation Primary credit rate An interest rate at which sound depository institutions (banks) can borrow short-term funds at 1% above the targeted fed funds rate.

.To Keynes, the amount of investment was determined independently by long-term profit expectations and, to a lesser extent, the interest rate.^ The amount invested is completely independent of the interest rate or the amount saved.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Savings, Investment, Interest rate .
  • Economics Homework Help - Micro, Macro Economics | Economics Assignment Help - High School, College Students. 17 January 2010 5:10 UTC www.classof1.com [Source type: General]

^ But how was the level of the rate of interest determined?
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

.The latter opens the possibility of regulating the economy through money supply changes, via monetary policy.^ For this reason, management of the money supply is a key aspect of monetary policy .
  • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

^ The new paradigm advocated an economy with full employment and shared prosperity, and gave government the critical role of regulating markets and adjusting monetary and fiscal policy to ensure levels of demand sufficient to generate full employment.
  • In name only | Comment is free | guardian.co.uk 17 January 2010 5:10 UTC www.guardian.co.uk [Source type: News]

^ Friedman has attempted to show that changes in the monetary stock have preceded great turning-points in the cyclical movement of the economy and that the central condition for economic stability is a sound monetary policy which acts not upon interest rates but on the money supply.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www.marxists.org [Source type: FILTERED WITH BAYES]

.Under conditions such as the Great Depression, Keynes argued that this approach would be relatively ineffective compared to fiscal policy.^ SlimCarlos, what would the outcome of such a fiscal policy be?
  • Edmund Phelps Raises Doubts About Keynesian Remedies « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: FILTERED WITH BAYES]

^ From Wikipedia: Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches : * a reduction in interest rates.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

^ For a discussion of fiscal policy during the Great Depression, see E. Cary Brown, “Fiscal Policy in the ’Thirties: A Reappraisal,” American Economic Review 46, no.
  • The Great Depression and Keynesian Economics | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]
  • The Great Depression and Keynesian Economics | Flat World Knowledge 17 January 2010 5:10 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

.But during more "normal" times, monetary expansion can stimulate the economy.^ Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

^ And more important, as wage and price increases ripple through the economy, aggregation can easily distort the apparent timing relations.” .
  • John Quiggin » Refuted/obsolete economic doctrines #7: New Keynesian macroeconomics 9 February 2010 15:015 UTC johnquiggin.com [Source type: FILTERED WITH BAYES]

^ In essence, the economy during the depression was still structured as a boom time economy because regulation kept it from doing the painful restructuring necessary to get growing again.
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

[citation needed]

Postwar Keynesianism

.In the post-WWII years, Keynes's policy ideas were widely accepted.^ It accepts Keynes’ own belief in the primacy of ideas in the shaping of state economic policy.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www2.cddc.vt.edu [Source type: Original source]

^ INTERVIEWER: Can you describe the process by which Keynes's ideas did get accepted in Washington?
  • Commanding Heights : John Kenneth Galbraith | on PBS 9 February 2010 15:015 UTC www.pbs.org [Source type: Original source]

^ Joan Robinson says somewhat casually of post-war Keynesian policy: ‘As we know, for twenty-five years serious recessions were avoided by following this policy’ (Robinson 1972).
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www2.cddc.vt.edu [Source type: Original source]

.Governments prepared high quality economic statistics on an ongoing basis and tried to base their policies on the Keynesian theory that had become the norm.^ Within the economics profession, recent work on the theory of long-run growth is described in terms of mathematical equations and statistical analysis.
  • Beyond Classical and Keynesian Macroeconomic Policy 9 February 2010 15:015 UTC www.gsb.stanford.edu [Source type: FILTERED WITH BAYES]

^ Instead, he wanted international coordination of Keynesian policies and an international economic architecture that enabled countries to pursue domestic policies with reduced exchange risks - and all this was to be combined with a high degree of freedom of trade.
  • Dani Rodrik's weblog: Does mercantilism work in a Keynesian world? 17 January 2010 5:10 UTC rodrik.typepad.com [Source type: General]

^ The conundrum will come when those who have lambasted free market capitalism run out of scapegoats and must admit that the malfunctioning within the economy is due to the character of the policies of government intervention and Keynesian-based economic theory.
  • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

.In the early era of new liberalism and social democracy, most western capitalist countries enjoyed low, stable unemployment and modest inflation, an era called the Golden Age of Capitalism.^ Keynesians argued that policy makers had a choice; they could have low inflation or low unemployment, but not both.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Historically speaking, this is the form of state that manifested itself in the so-called "late" capitalist countries, such as Germany, Italy and Japan.
  • SEATINI Articles 9 February 2010 15:015 UTC www.seatini.org [Source type: Original source]

^ Japan, which was the first of the major countries to cut sharply the rate of inflation, has succeeded in keeping inflation low with little change in its recorded unemployment rate.

.In terms of policy, the twin tools of post-war Keynesian economics were fiscal policy and monetary policy.^ Former is called fiscal but is monetary policy.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ It also studies effects of monetary policy and fiscal policy .
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ Monetary policy in the Keynesian IS-LM model .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

While these are credited to Keynes, others, such as economic historian David Colander, argue that they are rather due to the interpretation of Keynes by Abba Lerner in his theory of Functional Finance, and should instead be called "Lernerian" rather than "Keynesian".[14]
.Through the 1950s, moderate degrees of government demand leading industrial development, and use of fiscal and monetary counter-cyclical policies continued, and reached a peak in the "go go" 1960s, where it seemed to many Keynesians that prosperity was now permanent.^ Expansionary fiscal policy leads to an increase in aggregate demand.
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Former is called fiscal but is monetary policy.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ It also studies effects of monetary policy and fiscal policy .
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

.In 1971, Republican US President Richard Nixon even proclaimed "we are all Keynesians now".[15] However, with the oil shock of 1973, and the economic problems of the 1970s, modern liberal economics began to fall out of favor.^ Friedman has said we are all Keynesians now.

^ TOPIC 15 KEYNESIAN MACRO-ECONOMICS .
  • TOPIC 15 � KEYNESIAN MACRO-ECONOMICS 17 January 2010 5:10 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

^ This house believes that we are all Keynesians now.

.During this time, many economies experienced high and rising unemployment, coupled with high and rising inflation, contradicting the Phillips curve's prediction.^ Worse, it can change because of policy: for example, high unemployment under Prime Minister Margaret Thatcher in the UK may have led to a rise in the NAIRU (and a fall in potential) because many of the unemployed found themselves as structurally unemployed (also see unemployment), unable to find jobs that fit their skills in the British economy.
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

^ Based upon the empirical study done by A. W. Phillips in the late 1950s, many Keynesians came to believe that the inverse relationship between rising nominal wages and unemployment constituted a menu of social choices and that policymakers should acknowledge the preferences of the electorate by moving the economy to the most preferred combination of inflation and unemployment.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ But then, from 1983 on, unemployment fell concurrently with further declines in inflation, reaching 6 percent by the end of 1987 when inflation was about 4 percent-a flat contradiction of the asserted negative relation between unemployment and inflation embodied in the Phillips curve.

.This stagflation meant that the simultaneous application of expansionary (anti-recession) and contractionary (anti-inflation) policies appeared to be necessary, a clear impossibility.^ Alternatively, an increase in consumption, which causes an upward shift of the AE line which is likely to create inflation, then contractionary fiscal policy can be used fro a corrective downward shift.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

^ During the stagflation of the 1970s, inflation and unemployment both rose alarmingly at the same time, and economic volatility increased instead of succumbing to Keynesian policies.
  • Keynesian Theory 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]
  • Return of Depression Economics, Keynesian theory, monetary policy, Asian contagion 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

^ Rubin admits that the recession "would ordinarily be met with expansionary policy", but suggests that he has a better remedy than stimulus.
  • Mike Whitney: Rubin Rides Again 17 January 2010 5:10 UTC counterpunch.org [Source type: General]

.This dilemma led to the end of the Keynesian near-consensus of the 1960s, and the rise throughout the 1970s of ideas based upon more classical analysis, including monetarism, supply-side economics[15] and new classical economics.^ But supply-side economics has done its job, just as Keynesian economics did in the 1930s.
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

^ Keynesian Economics in the 1960s and 1970s .
  • Keynesian Economics in the 1960s and 1970s | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ Supply-side economics .
  • Economics Essays - Inflation 17 January 2010 5:10 UTC www.ukessays.com [Source type: FILTERED WITH BAYES]

.At the same time Keynesians began during the period to reorganize their thinking (some becoming associated with New Keynesian economics); one strategy, utilized also as a critique of the notably high unemployment and potentially disappointing GNP growth rates associated with the latter two theories by the mid-1980s, was to emphasize low unemployment and maximal economic growth at the cost of somewhat higher inflation (its consequences kept in check by indexing and other methods, and its overall rate kept lower and steadier by such potential policies as Martin Weitzman's share economy).^ Such has been the fate of Keynesian economics.
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

^ "Monetary policy is impotent; and inflation is caused by low unemployment, among other things."
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

^ During the stagflation of the 1970s, inflation and unemployment both rose alarmingly at the same time, and economic volatility increased instead of succumbing to Keynesian policies.
  • Return of Depression Economics, Keynesian theory, monetary policy, Asian contagion 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

[16]
.Currently, multiple schools of economic thought exist that trace their legacy to Keynes, notably Neo-Keynesian economics, New Keynesian economics, and Post-Keynesian economics.^ Post-Keynesian economics) New-Keynesian economics : The other school associated with developments in the Keynesian fashion.

^ Schools of economic thought .

^ Keynesianism The school of economic thought following John Maynard Keynes (1883 - 1946).

.Keynes' biographer Robert Skidelsky writes that the post-Keynesian school has remained closest to the spirit of Keynes' work in following his monetary theory and rejecting the neutrality of money.^ The quantity theory of money supplanted Keynes’s unsupported monetary hypothesizing.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Contents: First reactions to the General Theory -- An economist from Poland -- Generalizing the General Theory -- Those Cambridge controversies -- Outside Cambridge : the first US Post Keynesians -- Against the mainstream : Post Keynesian economics in the 1970s -- Economic heresy around the world -- Money and the monetarists -- Uncertainty, expectations and method -- Keynes, Kalecki, Sraffa : coherence?
  • Keynesian Economics :: UDM Libraries / Instructional Design Studio 9 February 2010 15:015 UTC research.udmercy.edu [Source type: Academic]

^ Monetary Reform (1923) was followed in 1930 by the two-volume Treatise on Money, much of which remains of value, though Keynes himself came to regard its theoretical analysis as simply a step on the road to the General Theory, the last of his major works.

[17][18]
.In the postwar era Keynesian analysis was combined with neoclassical economics to produce what is generally termed the "neoclassical synthesis", yielding Neo-Keynesian economics, which dominated mainstream macroeconomic thought.^ For decades after the Great Depression, Keynesian thought dominated the economics profession.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ In macroeconomics it is reflected in an early and lasting neoclassical synthesis with Keynesian macroeconomics.
  • Economics - Wikinfo 17 January 2010 5:10 UTC wikinfo.org [Source type: Academic]
  • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ Keynesian economics — proudly proclaiming itself as "modern," though with its roots deep in medieval and mercantilist thought — offers itself to the world as the panacea for our economic troubles.
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

.Though it was widely held that there was no strong automatic tendency to full employment, many believed that if government policy were used to ensure it, the economy would behave as neoclassical theory predicted.^ There would be no income.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ Malthus also questioned the automatic tendency of a market economy to produce full employment.
  • Economics - Wikinfo 17 January 2010 5:10 UTC wikinfo.org [Source type: Academic]

^ So, for example, no one considering Keynes’s advocacy of internationally coordinated economic policy and of what we might now call global economic governance would simply dismiss Keynes’s approach with Professor Phelp’s brief reference to stimulatory policy in an open economy being wasted.
  • Edmund Phelps Raises Doubts About Keynesian Remedies « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: FILTERED WITH BAYES]

.This post-war domination by Neo-Keynesian economics was broken during the stagflation of the 1970s.^ Keynesian Economics in the 1960s and 1970s .
  • Keynesian Economics in the 1960s and 1970s | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ As already noted, Keynesianism became the fundamental element in post-war social democratic ideology.
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www.marxists.org [Source type: FILTERED WITH BAYES]

^ It’s important to remember that at the time supply-side economics came into being, Keynesian economics dominated macroeconomic thinking and economic policy in Washington.
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

There was a lack of consensus among macroeconomists in the 1980s. .However, the advent of New Keynesian economics in the 1990s, modified and provided microeconomic foundations for the neo-Keynesian theories.^ Chapter 12: New Keynesian Theory .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ However, current economic theories are not established on these foundations.
  • Heterodox Economics Newsletter-27, By: Frederic S. Lee 17 January 2010 5:10 UTC l.web.umkc.edu [Source type: Academic]

^ Our Economics tutors can help in areas like Macroeconomics, Microeconomics and International Economics on topics like Review of Keynes, Classical and Structuralist macroeconomics, New Keynesian Economics; Introduction to macro models, Business Cycle Theory, Asset pricing, Theories of Inflation, Equilibrium Search and Matching Utility Function.
  • Economics Homework Help - Micro, Macro Economics | Economics Assignment Help - High School, College Students. 17 January 2010 5:10 UTC www.classof1.com [Source type: General]

.These modified models now dominate mainstream economics.^ Modern mainstream economics builds primarily on neoclassical economics, which began to develop in the late 1800s and models choices made in the allocation of scarce resources.

^ Part of the problem is that the canonical form of these papers requires spending two-thirds of the paper setting out the model, even the bits that are now standard.
  • John Quiggin » What went wrong with New Keynesian macro ? 9 February 2010 15:015 UTC johnquiggin.com [Source type: FILTERED WITH BAYES]

^ So, in Reagan’s new America, the economics profession dutifully found that Friedman’s economics was now “correct” and “scientific.” He and his supporters took over the mainstream.
  • Dissident Voice : Flip-flops of Economics 17 January 2010 5:10 UTC dissidentvoice.org [Source type: FILTERED WITH BAYES]

.Post-Keynesian economists on the other hand, reject the neoclassical synthesis, and more generally, neoclassical economics applied to the macroeconomy.^ Keynesian Economic applied to a family .
  • patrick.net » Keynesian Economic applied to a family 17 January 2010 5:10 UTC patrick.net [Source type: General]

^ Keynesian Economic applied to a family” .
  • patrick.net » Keynesian Economic applied to a family 17 January 2010 5:10 UTC patrick.net [Source type: General]

^ This really speaks to the distinction between fiscal and social Keynesianism, and the extent to which the full range of Keynes’ thinking never made it into the neoclassical/Keynesian synthesis that emerged after WWII and became known as “Keynesian economics.” .

.Post-Keynesian economics is a heterodox school which holds that both Neo-Keynesian economics and New Keynesian economics are incorrect, and a misinterpretation of Keynes's ideas.^ Post-Keynesian economics) New-Keynesian economics : The other school associated with developments in the Keynesian fashion.

^ They're both New Keynesian DSGEs?
  • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

^ The basic principles of Keynesian economics were developed by Keynes in his book, The General Theory of Employment, Interest and Money , published in 1936.
  • AmosWEB is Economics: Encyclonomic WEB*pedia 17 January 2010 5:10 UTC www.amosweb.com [Source type: FILTERED WITH BAYES]

.The Post-Keynesian school encompasses a variety of perspectives, but has been far less influential than the other more mainstream Keynesian schools.^ The "Keynesian revolution" was far more than a figure of speech.

^ Austrian monetary theorists, who pay more attention to the interest rate than does Friedman and as much attention to it as did Keynes, have a different perspective on the interest-rate issue.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ In post-Keynesian economics and other heterodox schools, agents have bounded capacities to acquire and treat information; in addition, their environment can be highly uncertain, as decisions to be taken themselves may change the future economic environment.
  • Issue No. 11 of the Post-Autistic Economics Review 17 January 2010 5:10 UTC www.btinternet.com [Source type: FILTERED WITH BAYES]

Main theories

.The two key theories of mainstream Keynesian economics are the IS-LM model of John Hicks, and the Phillips curve; both of these are rejected by Post-Keynesians.^ Circuit Theory and the state of Post Keynesian Economics .
  • Circuit Theory and the state of Post Keynesian Economics | Steve Keen's Debtwatch 17 January 2010 5:10 UTC www.debtdeflation.com [Source type: FILTERED WITH BAYES]

^ Tweets that mention Circuit Theory and the state of Post Keynesian Economics .
  • Circuit Theory and the state of Post Keynesian Economics | Steve Keen's Debtwatch 17 January 2010 5:10 UTC www.debtdeflation.com [Source type: FILTERED WITH BAYES]

^ John Hicks ' IS/LM model has been the most influential interpretation of The General Theory .
  • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

.It was with John Hicks that Keynesian economics produced a clear model which policy-makers could use to attempt to understand and control economic activity.^ Monetary policy in the Keynesian IS-LM model .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Agent-based modeling and experimental economics produce results that are indicative of this theory.
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ It is one of the most fundamental economic models, ubiquitously used as a basic building block in a wide range of more detailed economic models and theories.

.This model, the IS-LM model is nearly as influential as Keynes' original analysis in determining actual policy and economics education.^ Analysis of current economic conditions and policy .
  • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

^ Monetary policy in the Keynesian IS-LM model .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ The implications of analysis for economic policy .
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

.It relates aggregate demand and employment to three exogenous quantities, i.e., the amount of money in circulation, the government budget, and the state of business expectations.^ The law of demand states that, in general, price and quantity demanded are inversely related.

^ Ron Paul Keynes Keynesianism government planning demand AGGREGATE DEMAND consumption function .
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

^ The supply of and demand for money (alone) determine the equilibrium rate of interest, which in turn determines the level of investment and hence the level of employment.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.This model was very popular with economists after World War II because it could be understood in terms of general equilibrium theory.^ That is a term straight out of The General Theory.
  • Keynesian: Keynes and the Assault on Savings, Part 1 - Liberty Forest 9 February 2010 15:015 UTC www.ronpaulforums.com [Source type: FILTERED WITH BAYES]

^ The massive deficit spending of World War II did end the depression economy and set it upon the road to postwar prosperity.
  • Pajamas Media » Myth: Government Spending ‘Stimulates’ the Economy 9 February 2010 15:015 UTC pajamasmedia.com [Source type: FILTERED WITH BAYES]

^ From 1919 to World War II, Keynes's connection with government was primarily as an influential outsider.

.This encouraged a much more static vision of macroeconomics than that described above.^ Austrian monetary theorists, who pay more attention to the interest rate than does Friedman and as much attention to it as did Keynes, have a different perspective on the interest-rate issue.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ The war economy was precisely opposite: due to war, more demand than supply thus rationing: so it is true the citizens still didn’t have much.
  • Pajamas Media » Myth: Government Spending ‘Stimulates’ the Economy 9 February 2010 15:015 UTC pajamasmedia.com [Source type: FILTERED WITH BAYES]

^ If they have $0 more than before, then they can't create so much as $5 more, much less the $45 more that you are claiming via your lockstep multiplier.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

[citation needed]
.The second main part of a Keynesian policy-maker's theoretical apparatus was the Phillips curve.^ Keynesians argued that policy makers had a choice; they could have low inflation or low unemployment, but not both.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Keynesians quickly incorporated the new data into their existing paradigm and provided a theoretical underpinning for Phillips’ observed empirical data.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Keynesians accepted the Phillips curve trade off between unemployment and inflation.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

.This curve, which was more of an empirical observation than a theory, indicated that increased employment, and decreased unemployment, implied increased inflation.^ More inflation means less unemployment; less inflation means more unemployment.

^ As its title indicated, the General Theory was intended as an analysis of employment in the first instance.
  • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

^ "It is more expedient to aim at a rigid money-wage policy than at a flexible policy responding in easy stages to changes in the amount of unemployment."
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.Keynes had only predicted that falling unemployment would cause a higher price, not a higher inflation rate.^ Higher rates of inflation.
  • The Catholic Church + The Keynesian Multiplier | Wandering the Oceans 9 February 2010 15:015 UTC www.sailblogs.com [Source type: Original source]

^ Keynesians predicted higher unemployment and lower inflation.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Wages are falling which will cause prices to fall more, which will cause wages to fall, etc.
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

.Thus, the economist could use the IS-LM model to predict, for example, that an increase in the money supply would raise output and employment—and then use the Phillips curve to predict an increase in inflation.^ Inflation is defined as the money supply increasing faster than the supply of goods.
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

^ The 2 mains models: - IS/LM model - Phillips curve have been widely discredited as insufficient.
  • How I Became A Keynesian | The New Republic 9 February 2010 15:015 UTC www.tnr.com [Source type: Original source]

^ Socialism can be a tool used to manipulate supply/demand curves through pricing while disrupting natural equilibrium in the system but communism is the only way to fully determine, predict, and establish through mathematics a permanent and constant supply/demand curve through price action.
  • Krugman and His Economics of Keynesian Baby-Sitting - Manuel Lora - Mises Economics Blog 9 February 2010 15:015 UTC blog.mises.org [Source type: FILTERED WITH BAYES]

[citation needed]

Criticism

Monetarist criticism

.One school began in the late 1940s with Milton Friedman.^ He spends an enormous amount of space in trying to prove that the proposition would be consistent with the views of Milton Friedman and the Chicago School.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ Only one major economist, Milton Friedman of the University of Chicago, escaped the ‘disease’ and resisted the new orthodoxy.
  • Sorting Through Keynesian Rubble | c2c Journal 9 February 2010 15:015 UTC www.c2cjournal.ca [Source type: FILTERED WITH BAYES]

^ Lucas went on to note that "in the late 1960s Milton Friedman (1968) and Edmund Phelps (1968) had argued .

.Instead of rejecting macro-measurements and macro-models of the economy, the monetarist school embraced the techniques of treating the entire economy as having a supply and demand equilibrium.^ The price in equilibrium is determined by supply and demand.
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ Recall the way in which equilibrium is obtained in this supply and demand model.
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ The supply of and demand for money (alone) determine the equilibrium rate of interest, which in turn determines the level of investment and hence the level of employment.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

.However, because of Irving Fisher's equation of exchange, they regarded inflation as solely being due to the variations in the money supply, rather than as being a consequence of aggregate demand.^ This is nothing more than an imbalance in the supply/demand equation.
  • Pajamas Media » Myth: Government Spending ‘Stimulates’ the Economy 9 February 2010 15:015 UTC pajamasmedia.com [Source type: FILTERED WITH BAYES]

^ Inflation is defined as the money supply increasing faster than the supply of goods.
  • Hot Air » Blog Archive » Video: Welcome back to Keynesian economics 17 January 2010 5:10 UTC hotair.com [Source type: Original source]

^ Real Business Cycle (RBC) theorists believe that most if not all fluctuations in the economy are due to supply side shocks, aggregate demand shocks such as changes in the money supply, changes in taxes, and changes in government spending affect nominal variables such as prices but have little to do with changes in output over time (however, government intervention does causes inefficiencies in these models so that less intervention is generally preferred to more).
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

.They argued that the "crowding out" effects discussed above would hobble or deprive fiscal policy of its positive effect.^ It also studies effects of monetary policy and fiscal policy .
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ They argue that, because of crowding-out effects, fiscal policy has no effect on GDP. Monetary policy does, but it should not be used.
  • Keynesian Economics in the 1960s and 1970s | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

^ They argued that fiscal policy had no effect on the economy.
  • Keynesian Economics in the 1960s and 1970s | Flat World Knowledge 9 February 2010 15:015 UTC www.flatworldknowledge.com [Source type: FILTERED WITH BAYES]

.Instead, the focus should be on monetary policy, which was considered ineffective by early Keynesians.^ Monetary policy should step in.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ Monetary policy in the Keynesian IS-LM model .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Confidence in government and government monetary authorities is an essential ingredient in Keynesian policies and must be restored before they can be applied.
  • Return of Depression Economics, Keynesian theory, monetary policy, Asian contagion 9 February 2010 15:015 UTC www.futurecasts.com [Source type: Original source]

.Monetarism had an ideological as well as a practical appeal: monetary policy does not, at least on the surface, imply as much government intervention in the economy as other measures.^ Free economy An economy free of government intervention.

^ A true Keynesian differs, in so much as he also believes that: 1) monetary policy is not the most effective tool for stabilising the economy and it may be completely ineffective in some circumstances (liquidity trap); 2) fiscal policy is effective and government spending is the preferred tool; 3) government intervention works and short-run consequences are more important than long-run ones.

^ The new paradigm advocated an economy with full employment and shared prosperity, and gave government the critical role of regulating markets and adjusting monetary and fiscal policy to ensure levels of demand sufficient to generate full employment.
  • In name only | Comment is free | guardian.co.uk 17 January 2010 5:10 UTC www.guardian.co.uk [Source type: News]

.The monetarist critique pushed Keynesians toward a more balanced view of monetary policy, and inspired a wave of revisions to Keynesian theory.^ Monetary policy in the Keynesian IS-LM model .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ I dislike Friedman because of his monetarist ties (actually closer to Keynesianism compared to the Austrian school in monetary policy (not fiscal)), but to suggest that big government Bush was somehow a free marketist, you are extremely wrong.
  • Keynesian Economics Is Wrong: Bigger Government Is Not Stimulus // Current 9 February 2010 15:015 UTC current.com [Source type: Original source]

^ His lasting contribution will be what, that Keynes was too quick to say monetary policy is useless but even here we end with Keynesian money demand functions not some Monetarist quantity theory.
  • John Quiggin » Refuted/obsolete economic doctrines #7: New Keynesian macroeconomics 9 February 2010 15:015 UTC johnquiggin.com [Source type: FILTERED WITH BAYES]

New classical macroeconomics criticism

.Another influential school of thought was based on the Lucas critique of Keynesian economics.^ Keynesian economics — proudly proclaiming itself as "modern," though with its roots deep in medieval and mercantilist thought — offers itself to the world as the panacea for our economic troubles.
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

^ Keynesian economics – proudly proclaiming itself as "modern," though with its roots deep in medieval and mercantilist thought – offers itself to the world as the panacea for our economic troubles.
  • Spotlight on Keynesian Economics by Murray N. Rothbard 9 February 2010 15:015 UTC www.lewrockwell.com [Source type: Original source]

^ Benny Lava Says: September 23rd, 2009 at 1:44 pm I thought there so many Keynesians because The Fed had bought off the economics profession.

.This called for greater consistency with microeconomic theory and rationality, and particularly emphasized the idea of rational expectations.^ In microeconomics , principal concepts include supply and demand , marginalism , rational choice theory , opportunity cost , budget constraints , utility , and the theory of the firm .
  • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

^ If history does matter then the future of an event cannot be based on theories of perfect foresight as we find in the Rational Expectations models.
  • What is Post Keynesian Economics? by Ric Holt 9 February 2010 15:015 UTC cc.shu.edu.tw [Source type: FILTERED WITH BAYES]

^ The key developments included public choice theory, the theory of contestable monopoly and the early versions of the rational expectations hypothesis and property rights analysis.
  • John Quiggin - Conference Papers - Where is economics going? 17 January 2010 5:10 UTC www.uq.edu.au [Source type: Academic]

.Lucas and others argued that Keynesian economics required remarkably foolish and short-sighted behavior from people, which totally contradicted the economic understanding of their behavior at a micro level.^ There are other passages in Nelson’s account of feminist economics which are reminiscent of ideas which have been long advocated by some post-Keynesian economists.
  • Issue No. 11 of the Post-Autistic Economics Review 17 January 2010 5:10 UTC www.btinternet.com [Source type: FILTERED WITH BAYES]

^ Odysseus360 wrote: The problem with the Keynesian debate, or Hayak's freemarket debate is that people are using classic economic theory to decide actions in today's economy.
  • Economist Debates: Keynesian principles: Statements (Printer Version) 9 February 2010 15:015 UTC goliveinternet.economist.com [Source type: Original source]

^ This was also pointed out by post-Keynesian Joan Robinson, who argued that, since ideology and economics were intimately tied up, economics was little different from a branch of theology.
  • Issue No. 11 of the Post-Autistic Economics Review 17 January 2010 5:10 UTC www.btinternet.com [Source type: FILTERED WITH BAYES]

.New classical economics introduced a set of macroeconomic theories which were based on optimising microeconomic behavior.^ Most classical economic theories hold that economics is a behavioral or logical science.
  • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

^ New Keynesian economics” was their response to the demand, from monetarist and new classical critics, for the provision of a microeconomic foundation for Keynesian macroeconomics.
  • What went wrong with New Keynesian macro ? (more bookblogging) — Crooked Timber 9 February 2010 15:015 UTC crookedtimber.org [Source type: FILTERED WITH BAYES]

^ Agent-based modeling and experimental economics produce results that are indicative of this theory.
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

.These models have been developed into the Real Business Cycle Theory, which argues that business cycle fluctuations can to a large extent be accounted for by real (in contrast to nominal) shocks.^ A. Keynesian business cycle theory .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ What is the Keynesian theory of the business cycle?
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ In the 1970s, we were unaware of real business cycle theory or New Keynesian theory.
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

Austrian School criticism

.Austrian economist Friedrich Hayek criticized Keynesian economic policies for what he called their fundamentally collectivist approach, arguing that such theories encourage centralized planning, which leads to malinvestment of capital, which is the cause of business cycles[19].^ Such has been the fate of Keynesian economics.
  • Economist's View: Supply-Side Economics: Paul Krugman Responds 17 January 2010 5:10 UTC economistsview.typepad.com [Source type: FILTERED WITH BAYES]

^ A. Keynesian business cycle theory .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ What is the Keynesian theory of the business cycle?
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.Hayek also argued that Keynes' study of the aggregate relations in an economy is fallacious, as recessions are caused by micro-economic factors.^ Economics · US economic growth and recession · Global economy · Global recession Related .
  • Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy | Comment is free | guardian.co.uk 9 February 2010 15:015 UTC www.guardian.co.uk [Source type: News]

^ Economics · US economy Related .
  • In name only | Comment is free | guardian.co.uk 17 January 2010 5:10 UTC www.guardian.co.uk [Source type: News]

^ From Wikipedia: Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches : * a reduction in interest rates.
  • FARK.com: (3971708) R.I.P. Keynesian Economics: 1936-2008. We hardly knew ye 17 January 2010 5:10 UTC www.fark.com [Source type: General]

.Hayek claimed that what starts as temporary governmental fixes usually become permanent and expanding government programs, which stifle the private sector and civil society.^ It's the private sector, which controls government that is the problem.
  • Keynesian Economics Is Wrong: Bigger Government Is Not Stimulus // Current 9 February 2010 15:015 UTC current.com [Source type: Original source]

^ Deregulation and other measures to make the private sector, and government, more competitive were actively pursued.
  • Sorting Through Keynesian Rubble | c2c Journal 9 February 2010 15:015 UTC www.c2cjournal.ca [Source type: FILTERED WITH BAYES]

^ The conference is intended to provide a forum for new economists (in post-graduate research programs or private/public sectors) to present papers from any area of economics.
  • Heterodox Economics Newsletter-44, By: Frederic S. Lee 17 January 2010 5:10 UTC l.web.umkc.edu [Source type: Academic]

.Other Austrian school economists have also attacked Keynesian economics.^ To me it only serves to reinforce something that I've come to notice over the past 2-3 years, which is that Austrian economists (and to a lesser extent, old school classical economists) have a much more thorough grasp of Keynesian economics than most self-professed Keynesians.
  • Krugman Falls into the Keynesian Accounting Trap - Mises Daily - Mises Economics Blog 9 February 2010 15:015 UTC blog.mises.org [Source type: FILTERED WITH BAYES]

^ Additionally DrKrbyLuv....there are two substantial differences between Keynesian Economics and Austrian.
  • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

^ In post-Keynesian economics and other heterodox schools, agents have bounded capacities to acquire and treat information; in addition, their environment can be highly uncertain, as decisions to be taken themselves may change the future economic environment.
  • Issue No. 11 of the Post-Autistic Economics Review 17 January 2010 5:10 UTC www.btinternet.com [Source type: FILTERED WITH BAYES]

.Henry Hazlitt criticized, paragraph by paragraph, Keynes' General Theory.^ Keynes, General Theory , pp.
  • KEYNESIAN SPLENETICS 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ The preface to Keynes's General Theory begins with a warning: "This book is chiefly addressed to my fellow economists."
  • KEYNESIAN MYTHS 17 January 2010 5:10 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ It’s clear from the excerpt that Phelps has never actually read Keynes’ General Theory.
  • Edmund Phelps Raises Doubts About Keynesian Remedies « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: FILTERED WITH BAYES]

[20] Murray Rothbard accuses Keynesianism of having "its roots deep in medieval and mercantilist thought."[21]

Methodological disagreement and different results that emerge

.Beginning in the late 1950s neoclassical macroeconomists began to disagree with the methodology employed by Keynes and his successors.^ Modern mainstream economics builds primarily on neoclassical economics, which began to develop in the late 1800s and models choices made in the allocation of scarce resources.

.Keynesians emphasized the dependence of consumption on disposable income and, also, of investment on current profits and current cash flow.^ The government spending will boost national incomes back up to the full employment level (Consumption + Investment + Government, on the graph).
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ If the prospects for business profits are very gloomy, current investment plans may be to allow existing capital to wear out rather than replace it.
  • TOPIC 14 � THE KEYNESIAN REVOLUTION 9 February 2010 15:015 UTC www.chass.utoronto.ca [Source type: FILTERED WITH BAYES]

^ Similarly, in the Keynesian theory of the adjustment process toward the level of equilibrium, if aggregate investment is greater than aggregate saving, the economy is supposed to expand toward the level of income where aggregate saving equals aggregate investment.
  • Spotlight on Keynesian Economics - Murray N. Rothbard - Mises Institute 9 February 2010 15:015 UTC mises.org [Source type: FILTERED WITH BAYES]

.In addition Keynesians posited a Phillips curve that tied nominal wage inflation to unemployment rate.^ Keynesians accepted the Phillips curve trade off between unemployment and inflation.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

^ Based upon the empirical study done by A. W. Phillips in the late 1950s, many Keynesians came to believe that the inverse relationship between rising nominal wages and unemployment constituted a menu of social choices and that policymakers should acknowledge the preferences of the electorate by moving the economy to the most preferred combination of inflation and unemployment.
  • IS MILTON FRIEDMAN A KEYNESIAN? 9 February 2010 15:015 UTC www.auburn.edu [Source type: FILTERED WITH BAYES]

^ Economists believed that the rate at which nominal wages increased corresponded closely with the inflation rate, and that the Phillips curve therefore implied a trade off between unemployment and inflation.
  • Christianity and Economics - The Fall of Keynesian Economics 9 February 2010 15:015 UTC www.evangelsociety.org [Source type: Original source]

.To buttress these theories Keynesians typically traced the logical foundations of their model (using introspection) and buttressed their assumptions with statistical evidence.^ It is one of the most fundamental economic models, ubiquitously used as a basic building block in a wide range of more detailed economic models and theories.

^ These are usually made to be endogenous features of the models, rather than simply assumed as in older Keynesian-style ones.
  • Economics - Wikinfo 17 January 2010 5:10 UTC wikinfo.org [Source type: Academic]
  • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

^ All of these value theories are used in current economic work with varying degrees of acceptance.

[22] .Neoclassical theorists demanded that macroeconomics be grounded on the same foundations as microeconomic theory, profit-maximizing firms and utility maximizing consumers.^ In microeconomic theory supply and demand attempts to describe, explain, and predict the price and quantity of goods sold in perfectly competitive markets .

^ According to neoclassical theory, the volume of capital is normally determined as capitalised income, depending on the interest on a stock of capital assets (which, in conditions of equilibrium, is identified with the rate of profit).
  • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www.marxists.org [Source type: FILTERED WITH BAYES]

^ Neoclassical economics is characterised by maximization (leisure time, wealth, health, happiness - all commonly reduced to the concept of utility) subject to constraints.

[22]
The result of this shift in methodology produced several important divergences from Keynesian Macroeconomics:[22]
  1. Independence of Consumption and current Income (life-cycle permanent income hypothesis)
  2. Irrelevance of Current Profits to Investment (Modigliani-Miller theorem)
  3. Long run independence of inflation and unemployment (natural rate of unemployment)
  4. The inability of monetary policy to stabilize output (rational expectations)
  5. Irrelevance of Taxes and Budget Deficits to Consumption (Ricardian Equivalence)

Keynesian responses to the critics

.The heart of the 'new Keynesian' view rests on microeconomic models that indicate that nominal wages and prices are "sticky," i.e., do not change easily or quickly with changes in supply and demand, so that quantity adjustment prevails.^ Price and wage rigidity is the central feature of New Keynesian economics.
  • What went wrong with New Keynesian macro ? (more bookblogging) — Crooked Timber 9 February 2010 15:015 UTC crookedtimber.org [Source type: FILTERED WITH BAYES]

^ Scarcity is defined as: when the price is zero, the quantity demanded exceeds the quantity supplied.

^ Meeting the demand at the fixed nominal price .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

According to economist Paul Krugman, "while I regard the evidence for such stickiness as overwhelming, the assumption of at least temporarily rigid nominal prices is one of those things that works beautifully in practice but very badly in theory."[23] This integration is further spurred by the work of other economists which questions rational decision-making in a perfect information environment as a necessity for micro-economic theory. .Imperfect decision making such as that investigated by Joseph Stiglitz underlines the importance of management of risk in the economy.^ It is completely ridiculous to assume that is the way people in the present make choices (It is also ridiculous to assume that an economy has a steady state when billions of functions and decisions could be non-linear).
  • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

^ Close Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy .
  • Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy | Comment is free | guardian.co.uk 9 February 2010 15:015 UTC www.guardian.co.uk [Source type: News]

^ Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy .
  • Joseph Stiglitz: Keynesian economics finds new relevancy in the 21st century global economy | Comment is free | guardian.co.uk 9 February 2010 15:015 UTC www.guardian.co.uk [Source type: News]

.Over time, many macroeconomists have returned to the IS-LM model and the Phillips curve as a first approximation of how an economy works.^ This is how an economy presumably works in normal times.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

^ The 2 mains models: - IS/LM model - Phillips curve have been widely discredited as insufficient.
  • How I Became A Keynesian | The New Republic 9 February 2010 15:015 UTC www.tnr.com [Source type: Original source]
  • How I Became A Keynesian | The New Republic 9 February 2010 15:015 UTC www.tnr.com [Source type: Original source]

^ When a person is deciding how much to work, they have to weigh the value of leisure time against what is being offered in compensation for their labor.
  • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

.New versions of the Phillips curve, such as the "Triangle Model", allow for stagflation, since the curve can shift due to supply shocks or changes in built-in inflation.^ The catalyst for the change was the inflation and stagflation of the 1970s.

^ C. Supply shocks in the Keynesian model .
  • Chapter 12: New Keynesian Theory 9 February 2010 15:015 UTC edwardmcphail.com [Source type: FILTERED WITH BAYES]

^ Continued low growth in the world will restrain trade growth / commodity inflation (it will force changes, and foster new relationships that will destabilize the status quo.
  • Guest Post: Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: Original source]

In the 1990s, the original ideas of "full employment" had been modified by the NAIRU doctrine, sometimes called the "natural rate of unemployment." NAIRU advocates suggest restraint in combating unemployment, in case accelerating inflation should result. .However, it is unclear exactly what the value of the NAIRU should be—or whether it even exists.^ (They do not look at whether a policy should be implemented for value-based reasons) And unsurprisingly, most of the U.S. Congress's "work" for the past century has not.
  • Guest Post: Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: Original source]

See also

References

  1. ^ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River: Pearson Prentice Hall. ISBN 0130630853. 
  2. ^ Chris Giles in London, Ralph Atkins in Frankfurt and Krishna Guha in Washington. "The undeniable shift to Keynes". The Financial Times. http://www.ft.com/cms/s/0/c4cf37f4-d611-11dd-a9cc-000077b07658.html. Retrieved 2009-01-23. 
  3. ^ Blinder, Alan S. (2002), Keynesian Economics, http://www.econlib.org/library/Enc/KeynesianEconomics.html, retrieved 2008-04-09 
  4. ^ Markwell, Donald (2006), John Maynard Keynes and International Relations: Economic Paths to War and Peace, New York: Oxford University Press, ISBN 0198292368 
  5. ^ Glasner, David (1997), "Attwood, Thomas (1783-1856)", in Glasner, David, Business Cycles and Depressions: An Encyclopedia, Taylor & Francis, p. 22, ISBN 0824009444, http://books.google.co.uk/books?id=e1ZEPd_pQnoC&pg=PA22, retrieved 2009-06-15 
  6. ^ Ohlin, Bertil (1937), "Some Notes on the Stockholm Theory of Savings and Investment", Economic Journal 
  7. ^ Dimand, Robert William (1988), The origins of the Keynesian revolution, Stanford: Stanford University Press, p. 117, ISBN 0804715254 
  8. ^ Keynes, John Maynard (1930), Treatise on Money, London: Macmillan, p. 90 
  9. ^ Nash, Robert T.; Gramm, William P. (1969). "A Neglected Early Statement the Paradox of Thrift". History of Political Economy 1 (2): 395–400. doi:10.1215/00182702-1-2-395. http://hope.dukejournals.org/cgi/pdf_extract/1/2/395. 
  10. ^ Robertson, John M. (1892). The Fallacy of Saving. http://www.archive.org/stream/fallacyofsavings00robe/fallacyofsavings00robe_djvu.txt. 
  11. ^ cf. General Theory, Ch.1,2
  12. ^ The General Glut Controversy, http://cepa.newschool.edu/het/essays/classic/glut.htm 
  13. ^ Keynes, John Maynard (1924). "The Theory of Money and the Foreign Exchanges". A Tract on Monetary Reform. 
  14. ^ "What eventually became known as textbook Keynesian policies were in many ways Lerner’s interpretations of Keynes's policies, especially those expounded in The Economics of Control (1944) and later in The Economics of Employment (1951). . . . Textbook expositions of Keynesian policy naturally gravitated to the black and white 'Lernerian' policy of Functional Finance rather than the grayer Keynesian policies. Thus, the vision that monetary and fiscal policy should be used as a balance wheel, which forms a key element in the textbook policy revolution, deserves to be called Lernerian rather than Keynesian." (Colander 1984, p. 1573)
  15. ^ a b Lewis, Paul (August 15, 1976), "Nixon's Economic Policies Return to Haunt the G.O.P.", New York Times, http://select.nytimes.com/gst/abstract.html?res=FB0717FE345E1A738DDDAC0994D0405B868BF1D3 
  16. ^ Blinder, Alan S. (1987). Hard Heads, Soft Hearts: Tough Minded Economics for a Just Society. New York: Perseus Books. pp. 65–66. ISBN 0201145197. 
  17. ^ Skidelsky 2009
  18. ^ Financial markets, money and the real world, by Paul Davidson, pp. 88–89
  19. ^ Hayek, Friedrich (1989). The Collected Works of F.A. Hayek. University of Chicago Press. p. 202. ISBN 978-0-226-32097-7. 
  20. ^ The Failure of the 'New Economics': An Analysis of the Keynesian Fallacies, http://www.mises.org/books/failureofneweconomics.pdf 
  21. ^ Rothbard, Murray (1947), Spotlight on Keynesian Economics, Ludwig von Mises Institute, http://mises.org/story/2950 
  22. ^ a b c Akerlof, George A. (2007). "The Missing Motivation in Macroeconomics". American Economic Review 97 (1): 5–36. doi:10.1257/aer.97.1.5. 
  23. ^ Krugman, Paul, There's Something About Macro, http://web.mit.edu/krugman/www/islm.html 

Further reading

  • Blinder, Alan. "Keynesian Economics". .Concise Encyclopedia of Economics.^ Library of Economics and Liberty : Provides concise encyclopedia, classic texts, articles, and data links by topic.
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

    ^ A recent Journal of Economic Perspectives piece and her entry on business cycles in the Concise Encyclopedia of Economics summarizes this work.
    • Search Results keynesian « Organizations and Markets 9 February 2010 15:015 UTC organizationsandmarkets.com [Source type: FILTERED WITH BAYES]

    ^ Concise Encyclopedia of Economics.
    • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

    .http://www.econlib.org/library/Enc/KeynesianEconomics.html.
     
  • Keynes, John Maynard (2004) [1919].^ Malthus also questioned the automatic tendency of a market economy forgotten until John Maynard Keynes revived it in the 1930s.
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

    ^ John Maynard Keynes (1883-1946) is the latest in a line of great British economists who had a profound influence on the discipline of economics.

    ^ It is Thomas Sowell, a respected economist that does not subscribe to John Maynard Keynes’ theory of economics.
    • patrick.net » Keynesian Economic applied to a family 17 January 2010 5:10 UTC patrick.net [Source type: General]

    .The Economic Consequences of the Peace.^ In Keynes 1920 book, "The Economic Consequences of the Peace", he states, " by a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of its citizens.
    • The Problem with Keynesian Economics: A Critique from the Left | ItsYourTimes.com 9 February 2010 15:015 UTC www.itsyourtimes.com [Source type: Original source]

    ^ Keynes, J.M. (1920) The Economic Consequences of the Peace, London: Macmillan.
    • What is Post Keynesian Economics? by Ric Holt 9 February 2010 15:015 UTC cc.shu.edu.tw [Source type: FILTERED WITH BAYES]

    ^ Keynes, in his book "Economic Consequences of the Peace", stated: "By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
    • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

    New Brunswick: Transaction Publishers. ISBN 0765805294. .http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/keynes/peace.htm. 
  • Keynes, John Maynard (1933-12-31).^ Malthus also questioned the automatic tendency of a market economy forgotten until John Maynard Keynes revived it in the 1930s.
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

    ^ It is Thomas Sowell, a respected economist that does not subscribe to John Maynard Keynes’ theory of economics.
    • patrick.net » Keynesian Economic applied to a family 17 January 2010 5:10 UTC patrick.net [Source type: General]

    ^ I knew that John Maynard Keynes was widely considered the greatest economist of the twentieth century, and I knew of his book's extraordinary reputation.
    • How I Became A Keynesian | The New Republic 9 February 2010 15:015 UTC www.tnr.com [Source type: Original source]

    "An Open Letter to President Roosevelt". .New York Times.^ From January 30, 2009 New York Times, “A Rise in Pessimism in the Corner Office”: .
    • The Problem with Keynesian Economics: A Critique from the Left | ItsYourTimes.com 9 February 2010 15:015 UTC www.itsyourtimes.com [Source type: Original source]

    ^ "New Consensus Sees Stimulus Package as Worthy Step " Jackie Calmes and Michael Cooper, New York Times) .
    • Mike Whitney: Rubin Rides Again 17 January 2010 5:10 UTC counterpunch.org [Source type: General]

    ^ The New York Times Magazine 13 Sep.
    • Economics - Wikinfo 17 January 2010 5:10 UTC wikinfo.org [Source type: Academic]

    .http://select.nytimes.com/gst/abstract.html?res=F70A11FB3C5513738DDDA80B94DA415B838FF1D3.
     
  • Keynes, John Maynard (2007) [1936].^ Malthus also questioned the automatic tendency of a market economy forgotten until John Maynard Keynes revived it in the 1930s.
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

    ^ John Maynard Keynes (1883-1946) is the latest in a line of great British economists who had a profound influence on the discipline of economics.

    ^ You can read my discussion on the topic here: http://robertdfeinman.com/society/econometrics.html .
    • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

    .The General Theory of Employment, Interest and Money.^ As its title indicated, the General Theory was intended as an analysis of employment in the first instance.
    • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

    ^ Paul Krugman notes in his introduction to Keynes’ The General Theory of Money, Employment, Interest, and Money , that a panel of conservatives scholars in 2005 that was asked to indentify the ten most dangerous books ever written, selected Keynes’ as one, and even considered The General Theory more dangerous than the books of V.I. Lenin and Frantz Fanon.
    • How Keynesian Stimulus Works | The Agonist 9 February 2010 15:015 UTC agonist.org [Source type: Original source]

    ^ The General Theory of Employment Interest and Money (London: Macmillan, 1936), pp.

    .Basingstoke, Hampshire: Palgrave Macmillan.^ Arthur M. Diamond, Jr. The New Palgrave Dictionary of Economics , 2nd Edition, Basingstoke and New York: Palgrave Macmillan .
    • Economics - Wikinfo 17 January 2010 5:10 UTC wikinfo.org [Source type: Academic]

    ISBN 0230004768. http://cepa.newschool.edu/het/essays/keynes/keynescont.htm. 
  • Lindahl, Erik (1954). ."On Keynes' economic system". Economic Record 30: 19–32, 159–171.  Especially up to p. 26. — This offers a compact summary of the Keynes equations and their interrelation.
  • Donald Markwell, John Maynard Keynes and International Relations: Economic Paths to War and Peace, Oxford University Press, 2006.
  • Traill, R.R. (2008).^ Keynes and the Break-up of Economic Liberalism .
    • The Crisis of Keynesian Economics by Geoffrey Pilling 9 February 2010 15:015 UTC www2.cddc.vt.edu [Source type: Original source]

    ^ JOHN MAYNARD KEYNES (1883-1946) .
    • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

    ^ John Maynard Keynes (1883-1946) .
    • KEYNESIAN ECONOMICS 9 February 2010 15:015 UTC members.shaw.ca [Source type: FILTERED WITH BAYES]

    .Problems with Economic Rationalism — Psychology, Green-issues, and Jobs.^ More important, hopefully, is an understanding among an increasing number of actors that in relation to issues of environment and development, neoclassical economics is today more of a problem than a solution.
    • Issue No. 11 of the Post-Autistic Economics Review 17 January 2010 5:10 UTC www.btinternet.com [Source type: FILTERED WITH BAYES]

    ^ And the fact that Keynes believed that the economically stimulative effect of giving someone a job could be divorced from the issue of what was being produced is crazy.

    ^ "John R. Commons and the Problem of International Labor Rights," Journal of Economic Issues, vol.36, no.2, 2002.
    • Economists - The Heterodox Economics Portal - HETecon.com 9 February 2010 15:015 UTC www.open.ac.uk [Source type: Academic]

    Melbourne: Ondwelle. .http://www.ondwelle.com/OSM08.pdf.  — Includes a more concise structured version of Lindahl's summary (in Section 2.1 + Appendix), — a discussion of the 2008 financial-crash, — and comments on J.L.Stein's generalization:-
  • Stein, Jerome L. (1982).^ You can read my discussion on the topic here: http://robertdfeinman.com/society/econometrics.html .
    • Econbrowser: The Great Multiplier Debate, New Keynesian Edition 9 February 2010 15:015 UTC www.econbrowser.com [Source type: Original source]

    ^ The so called “New institutional finance” (both models of credit rationing and financial accelerator) as described by Knoop in this book ( http://www.amazon.com/Modern-Financial-Macroeconomics-Panics-Crashes/dp/1405161817 ) fit rather well in the picture of the current crisis.
    • What went wrong with New Keynesian macro ? (more bookblogging) — Crooked Timber 9 February 2010 15:015 UTC crookedtimber.org [Source type: FILTERED WITH BAYES]

    ^ Synoia November 15, 2008 - 12:03pm login to post comments Generally by the time you hit depression economics the rich have been hit by the "crash tax."
    • How Keynesian Stimulus Works | The Agonist 9 February 2010 15:015 UTC agonist.org [Source type: Original source]

    .Monetarist, Keynesian & New classical economics.^ Keynesian, New Keynesian, Monetarist, and New Classical macroeconomics are variations on a theme.
    • Search Results keynesian « Organizations and Markets 9 February 2010 15:015 UTC organizationsandmarkets.com [Source type: FILTERED WITH BAYES]

    ^ Within macroeconomics there is, in general order of their appearance in the literature; classical economics , Keynesian economics , the neoclassical synthesis, post-Keynesian economics , monetarism , new classical economics , and supply-side economics .
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]
    • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

    ^ The economics derived from Kaldor and Kalecki, and because of the latter, from Robinson, are the better bridge between the classical and the post-Keynesian analysis."
    • What is Post Keynesian Economics? by Ric Holt 9 February 2010 15:015 UTC cc.shu.edu.tw [Source type: FILTERED WITH BAYES]

    Oxford: Blackwell. ISBN 0631129081. 
  • Gordon, Robert J. (1990). ."What Is New-Keynesian Economics?".^ Within macroeconomics there is, in general order of their appearance in the literature; classical economics , Keynesian economics , the neoclassical synthesis, post-Keynesian economics , monetarism , new classical economics , and supply-side economics .
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]
    • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

    ^ In the U.S., the most important was doubtless Henry Hazlitt, The Failure of the New Economics: An Analysis of the Keynesian Fallacies (Princeton, N.J.: Van Nostrand, 1959).

    ^ New Keynesian Economics , by Gregory Mankiw.
    • " + soundfiledesc + " 9 February 2010 15:015 UTC www.econtalk.org [Source type: General]

    .Journal of Economic Literature 28 (3): 1115–1171.^ The JEL classification codes of the Journal of Economic Literature provide a comprehensive, detailed way of classifying and searching for economics articles by subject matter.
    • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

    ^ Includes electronic editions of the American Economic Review, the Journal of Economic Literature and the Journal of Economic Perspectives as well as the internet guide Resources for Economists on the Internet (RFE).
    • Top20Economics.com - Online Directory for Economics Education. 17 January 2010 5:10 UTC top20economics.com [Source type: Academic]

    ^ Articles in journals are usually classified according to the system used by the Journal of Economic Literature (JEL).
    • What is Economics? 17 January 2010 5:10 UTC ipedia.net [Source type: Academic]

    .http://www.jstor.org/stable/2727103.
     
  • Hazlitt, Henry (1959).^ Chapter 2, “The Spontaneity of the Masses and the Consciousness of the Social-Democrats”: http://www.marx.org/archive/lenin/works/1901/witbd/ii.htm .
    • The Problem with Keynesian Economics: A Critique from the Left | ItsYourTimes.com 9 February 2010 15:015 UTC www.itsyourtimes.com [Source type: Original source]

    ^ Capital”: http://www.marx.org/archive/marx/works/1844/manuscripts/capital.htm#1 .
    • The Problem with Keynesian Economics: A Critique from the Left | ItsYourTimes.com 9 February 2010 15:015 UTC www.itsyourtimes.com [Source type: Original source]

    ^ In the U.S., the most important was doubtless Henry Hazlitt, The Failure of the New Economics: An Analysis of the Keynesian Fallacies (Princeton, N.J.: Van Nostrand, 1959).

    .The Failure of the ‘New Economics’.^ In the U.S., the most important was doubtless Henry Hazlitt, The Failure of the New Economics: An Analysis of the Keynesian Fallacies (Princeton, N.J.: Van Nostrand, 1959).

    ^ A new school of Economics will rise out of the ashes of the failure of the American economy as happened after the Great Depression.
    • Guest Post: Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong « naked capitalism 9 February 2010 15:015 UTC www.nakedcapitalism.com [Source type: Original source]

    ^ In the book "The Failure of the New Economics", Hazlitt stated, correctly, "Keynes's plan for 'the socialization of investment' would inevitably entail socialism and state planning.
    • The Degenerative Nature of Keynesian Economics 9 February 2010 15:015 UTC www.nolanchart.com [Source type: Original source]

    .An Analysis of the Keynesian Fallacies
    .^ In the U.S., the most important was doubtless Henry Hazlitt, The Failure of the New Economics: An Analysis of the Keynesian Fallacies (Princeton, N.J.: Van Nostrand, 1959).

    .Princeton, NJ: Van Nostrand.^ In the U.S., the most important was doubtless Henry Hazlitt, The Failure of the New Economics: An Analysis of the Keynesian Fallacies (Princeton, N.J.: Van Nostrand, 1959).

    http://www.mises.org/books/failureofneweconomics.pdf
    . 
  • Colander, David (December 1984), "Was Keynes a Keynesian or a Lernerian?", Journal of Economic Literature 22: 1571–79, argues for the influence of Abba Lerner's interpretation Keynes in "textbook" Keynesianism. 

External links

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Simple English

Keynesian economics (Keynesianism) describes the economics theories from famous economist John Maynard Keynes.

Keynes believed that capitalism was a good economic system, but sometimes, when the economy becomes bad, the government should step in and do something about it.

When the economy is bad, people tend to save their money instead of spend it, and in result there is less economic activity.

Keynes believed that the government should spend a lot of money (even if it has to borrow the money and go into debt) to create jobs for unemployed people, and then those people would spend their money, which would create more jobs and get the economy's motor running again.

Franklin Roosevelt's New Deal during the Great Depression wasn't an example of Keynesian economics. Keynes wrote a letter to Roosevelt where he said he wasn't helping the economy.[1]

Some people such as conservatives, libertarians, and people who believe in Austrian economics are against Keynesian economics because they believe the economy can recover on its own without government intervention.

During the late 1970's Keynesian economics became less popular because inflation was high.

When a big recession happened in 2007, Keynesian economics became more popular. Leaders around the world (including Barack Obama) created stimulus packages which would allow their government to spend a lot money to create jobs.

Many economists such as Paul Krugman believe in Keynesian economics.

References

  1. An Open Letter to President Roosevelt



Citable sentences

Up to date as of December 18, 2010

Here are sentences from other pages on Keynesian economics, which are similar to those in the above article.








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