Make Entry -- Become an Editor -- Most Popular: (10, 25, 50, 75, 100)

   Help

Keynesian Economics

Keynesian economics is the field of economics that is based on the theories advocated by John Maynard Keynes, one of the most influential economists ever. He lived during the time of the First World War and of the subsequent era of economic difficulty known as the Great Depression. It was in response to these hard times that he wrote, and in 1936 published, his literary tour de force General Theory of Employment, Interest and Money, a book that would go on to change the face of economics as they were practiced at the time.

Keynesian economics worked at the macroeconomic level. The theories stated that the trends at the macro-level could overpower individuals and their actions at the micro-level. It emphasized the significance of the aggregate demand for goods in driving the economy, especially economies in a slump. It was based on this that Keynes advocated the idea of government intervention through policies that could combat deflation and unemployment by encouraging macro-level demand. For example, he believed that if during the Great Depression citizens were hoarding money regardless of how much the government expanded the supply, the government’s only recourse was to spend money in an attempt to restart the circular flow. Keynesian economists point to the Second World War as a validation of the theory: the Depression ended because the government spent massive amounts of money on defense.

Web Resources On Keynesian Economics

Encyclopedia of Economics
Wikipedia: Keynesian Economics

Book Resources On Keynesian Economics

Introducing Keynesian Economics by Peter Pugh
New Keynesian Economics, Vol. 1: Imperfect Competition and Sticky Prices by Mankiw & Romer (Editors)

Site Maps: Most Recent | Clusters | Browse
New: Graduate Student Job Opportunity