Keynesian Economics

Keynesian economics ( /ˈkeɪnziən/ KAYN-zee-ən; also called Keynesianism and Keynesian theory) are the group of macroeconomic schools of thought based on the ideas of 20th-century economist John Maynard Keynes. Keynesian economists believe that in the short run, productive activity is influenced by aggregate demand (total spending in the economy) and that aggregate demand does not necessarily equal aggregate supply (the total productive capacity of the economy). Instead it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment and inflation.

Advocates of Keynesian economics argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, particularly monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle. The theories forming the basis of Keynesian economics were first presented by Keynes in his book, The General Theory of Employment, Interest and Money, published in 1936. Keynes contrasted his approach to the 'classical' (more commonly 'neoclassical') economics that preceded his book. The interpretations of Keynes that followed are contentious and several schools of thought claim his legacy.

Keynesian economics advocates a mixed economy – predominantly private sector, but with a role for government intervention during recessions – and in the US served as the standard economic model during the later 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. The advent of the global financial crisis in 2008 has caused a resurgence in Keynesian thought.

Read more about Keynesian EconomicsTheory, Relationship To Other Schools of Economics

Other articles related to "keynesian economics, economics, economic, keynesians, keynesian":

Modern Economics - History - Keynesian Economics
... Main articles Keynesian economics and Post-Keynesian economics Keynesian economics derives from John Maynard Keynes, in particular his book The General ... Such terms as "revolutionary" have been applied to the book in its impact on economic analysis ... Keynesian economics has two successors ...
Keynesian Economics - Criticisms - New Classical Macroeconomics Criticisms
... school of thought was based on the Lucas critique of Keynesian economics ... 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 ... New classical economics introduced a set of macroeconomic theories that were based on optimising microeconomic behavior ...
Modern Economics - History - Other Schools and Approaches
... Main article Schools of economics Other well-known schools or trends of thought referring to a particular style of economics practiced at and disseminated from well-defined ... Contemporary mainstream economics is sometimes separated into the Saltwater approach of those universities along the Eastern and Western coasts of the US, and the ... there is, in general order of their appearance in the literature classical economics, Keynesian economics, the neoclassical synthesis, post-Keynesian economics, monetarism ...
The General Theory Of Employment, Interest And Money - Reception - Endorsement
... Nixon famously said in 1971 (ironically, shortly before Keynesian economics fell out of fashion) that "We are all Keynesians now", a phrase often repeated by Nobel laureate Paul Krugman ... Nevertheless, starting with Axel Leijonhufvud, this view of Keynesian economics came under increasing challenge and scrutiny and has now divided ... consensus view, found in most current text-books and taught in all universities, is New Keynesian economics, which accepts the neoclassical concept of long-run equilibrium but allows a role ...
Keynesian Revolution
... The Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy ... The revolution was set against the then orthodox economic framework Neoclassical economics ... The early stage of the Keynesian Revolution took place in the years following the publication of Keynes' General Theory in 1936 ...

Famous quotes containing the word economics:

    I am not prepared to accept the economics of a housewife.
    Jacques Chirac (b. 1932)