Keynesian Economics

Discipline: Economics

Named after the English economist John Maynard Keynes (1883-1946), Keynesian economics has influenced post-1945 economic management, particularly in its advocacy of government management of the economy.

Adherents believe that the macro-economy tends towards extended business cycles, with high levels of unemployed factors.

They assert that government management or stimulation of the economy to influence demand (through monetary or fiscal policy) can alleviate this problem of high unemployment. Monetary and fiscal policies thus stimulate the economy in times of slump by generating employment, and slow the economy down in times of inflation.

Also see: business cycle, classical macroeconomic model, equilibrium theory, general equilibrium theory

Source:
J M Keynes, The General Theory of Employment, Interest and Money (New York, 1936);
J Hicks, The Crisis in Keynesian Economics (Oxford, 1974)

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