33 Facts About Keynesian economics

Keynesian economics are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and inflation.

Keynesian economics developed during and after the Great Depression from the ideas presented by Keynes in his 1936 book, The General Theory of Employment, Interest and Money.

Keynesian economics was later redeveloped as New Keynesian economics, becoming part of the contemporary new neoclassical synthesis, that forms current-day mainstream macroeconomics.

MacroKeynesian economics is the study of the factors applying to an economy as a whole.

In regards to employment, the condition referred to by Keynes as the "first postulate of classical Keynesian economics" stated that the wage is equal to the marginal product, which is a direct application of the marginalist principles developed during the nineteenth century.

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An intellectual precursor of Keynesian economics was underconsumption theories associated with John Law, Thomas Malthus, the Birmingham School of Thomas Attwood, and the American economists William Trufant Foster and Waddill Catchings, who were influential in the 1920s and 1930s.

Keynesian economics interpreted his treatment of liquidity as implying a purely monetary theory of interest.

Keynesian economics saw the economy as unable to maintain itself at full employment automatically, and believed that it was necessary for the government to step in and put purchasing power into the hands of the working population through government spending.

Keynesian economics wrote that although his theory was explained in terms of an Anglo-Saxon laissez faire economy, his theory was more general in the sense that it would be easier to adapt to "totalitarian states" than a free market policy would.

Keynesian economics mentions "increased public works" as an example of something that brings employment through the multiplier, but this is before he develops the relevant theory, and he does not follow up when he gets to the theory.

Keynesian economics response is that such fiscal policy is appropriate only when unemployment is persistently high, above the non-accelerating inflation rate of unemployment.

Keynesian economics 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 during downturns, tends to exacerbate the negative effects of the business cycle.

Keynesian economics was the leader of the British delegation to the United Nations Monetary and Financial Conference in 1944 that established the Bretton Woods system of international currency management.

Keynesian economics was the principal author of a proposal – the so-called Keynes Plan – for an International Clearing Union.

Keynesian economics pointed out that surpluses lead to weak global aggregate demand – countries running surpluses exert a "negative externality" on trading partners, and posed far more than those in deficit, a threat to global prosperity.

Keynesian economics pointed out that the reduction of wages led to a reduction in national demand which constrained markets.

Keynesian economics criticised, for example, the neoclassical assumption of wage adjustment.

Keynesian economics criticised the static dimension of the theory of comparative advantage, which, in his view, by fixing comparative advantages definitively, led in practice to a waste of national resources.

Keynesian economics thus proposed the search for a certain degree of self-sufficiency.

Keynesian economics defends the idea of producing on national soil when possible and reasonable and expresses sympathy for the advocates of protectionism.

Keynesian economics considered that quotas could be more effective than currency depreciation in dealing with external imbalances.

Keynes's ideas became widely accepted after World War II, and until the early 1970s, Keynesian economics provided the main inspiration for economic policy makers in Western industrialized countries.

Keynes's biographer Robert Skidelsky writes that the post-Keynesian economics school has remained closest to the spirit of Keynes's work in following his monetary theory and rejecting the neutrality of money.

The post-Keynesian economics school encompasses a variety of perspectives, but has been far less influential than the other more mainstream Keynesian economics schools.

Keynesian schools of economics are situated alongside a number of other schools that have the same perspectives on what the economic issues are, but differ on what causes them and how best to resolve them.

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Keynesian economics argued that Keynes regarded the class struggle carelessly, and overlooked the class role of the capitalist state, which he treated as a deus ex machina, and some other points.

Keynesian economics argued that this was an unrealistic assumption about political, bureaucratic and electoral behaviour.

Keynesian economics thought that if it is generally accepted that democratic politics is nothing more than a battleground for competing interest groups, then reality will come to resemble the model.

Keynesian economics argued, "if you have a problem with politicians – criticize politicians, " not Keynes.

Keynesian economics argued that empirical evidence makes it pretty clear that Buchanan was wrong.

Lucas and others argued that Keynesian economics required remarkably foolish and short-sighted behaviour from people, which totally contradicted the economic understanding of their behaviour at a micro level.

New classical Keynesian economics introduced a set of macroeconomic theories that were based on optimizing microeconomic behaviour.

New classical theorists demanded that macroKeynesian economics be grounded on the same foundations as microeconomic theory, profit-maximizing firms and rational, utility-maximizing consumers.