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Keynes

John Maynard Keynes [1]

DefinitionEdit

In 1936 The General Theory of Employment, Interest, and Money John M. Keynes published the book which reflected a new view he had advocated during the "Great Depression." His thesis is that Markets could get stuck in adverse positions and that governments could exert force to remedy the problem.

  • Famous Quote: The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.
- John Maynard Keynes, A Tract on Monetary Reform (1923) Ch. 3 [2]

School of ThoughtEdit

Sir John Hicks and Alvin Hansen two of Keynes students created a platform for much of the Keynesian analyis when they created the IS-LM framework. [3]

This approach incorporated many of the ideas of keynes, notably including: Sticky Prices, Nominal Price Rigidity, ...

"Keynes vs. The Classics" [4]Edit

The title of this debate shows the radical nature of Keynes' view of economics. Many Authors and Lecturers attribute the foundation of Macroeconomics to Keynes and the development of his views by his students. "Classics" broadly defined is the body of economic thought which came before Keynes (Snowdon p. 36). This included not only Adam Smith through David Ricardo and followers (as expressed by Karl Marx) but also economists such as Cecil Pigou and Alfred Marshall (of the previous and overlapping generation).

Keynes argues that these economists expected too much from the market. This, perhaps, is evidenced by the quote included above. Keynes lived until 1946, so there is some speculation that he would have ammended his views or at least been skeptical about some of the eventual applications of his theories had he lived longer. This counter-factual is extended by an associate of Keynes at the London School of Economics LSE, F. A. Hayek (Hayek, 1966) [5]

Regardless the "Keynsian Revolution" did make what came before classical, and what came after a reaction to, his way of thinking.

Students of this school also included:Edit


Hydrolic Interpretation:Edit

  • Hicks 1937
  • Modigliani 1944
  • Klein 1947
  • Samuelson 1948
  • Hansen 1953

Fundamentalist Interpreation:Edit

  • Shackle 1967, 1974
  • Robinson 1962
  • Townshend 1937

Modified General Equilibrium ApproachEdit

  • Coddington 1983
  • Patinkin 1956
  • Clower 1965
  • Leijonhufvud 1968



Macroeconomic schools of thought
Austrian EconomicsClassical EconomistsKeynesian economicsMarxismMercantilismMonetarismNew ClassicalsNew KeynesiansNeoclassicalNeoclassical SynthesisNeo-KeynesianPhysiocracyPost-Keynesian economicsSupply-side economics

Sources:Edit

  1. HistoryCentral
  2. Quotationspage
  3. Main Wiki page on IS-LM
  4. Snowdon, Brian and Howard R. Vane. 2005: Edward Elgar Publishing;Modern Macroeconomics: Its Origins, Development And Current State
  5. Hayek, F. A. 1966 : Personal Recolections of Keynes and the "Keynesian Revolution." The Oriental Economist. 34
This macro-stub needs improving.

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