Routledge Dictionary of Economics, Second Edition
A distillation of the ideas in Keynes’s General Theory into a macroeconomic theory and policy consisting principally of a model of aggregate income and expenditure using IS-LM curves, an emphasis on the importance of the investment MULTIPLIER, an assertion that the LIQUIDITY preference schedule is stable in the long run and unaffected by the actions of CENTRAL BANKS, and an insistence on the major importance of fiscal policy so that money and the rate of interest are of little importance to the management of the economy Keynesian policy is most popularly regarded as the use of national budget deficits to maintain full employment. Although it was frequently praised in the 1950s and 1960s, it is doubtful whether many Western governments have pursued such policies for sustained periods of time. Heller cites the 1964 US tax cut of the Johnson Administration that he claims created 7 million jobs, doubled profits and increased gross domestic product by one-third. Other popular examples, e.g. the New Deal, have subsequently been challenged as only ephemeral exercises in applied Keynesianism. The Major government in the UK, 1992–7, is a more recent case of deficit spending. Just as MARX is reputed to have said ‘Je ne suis pas une marxiste’, Keynes would have been an uneasy member of the Keynesian School.
References
Coddington, A. (1976) ‘Keynesian economics: the search for first principles’, Journal of Economic Literature 14: 1258–73.
Hall, P.A.
(ed.) (1989) The Political Power of Economic Ideas: Keynesianism across Nations, Princeton, NJ: Princeton University Press.
Hamond, O.F. and Smithin, J.N. (eds) (1988) Keynes and Public Policy After Fifty Years, Aldershot: Edward Elgar; New York: New York University Press.
Hicks, J. (1974) The Crisis in Keynesian Economics, Oxford: Basil Blackwell.
Hutton, W. (1986) The Revolution that Never Was: An Assessment of Keynesian Economics, London: Longman.
Leijonhufvud, A. (1968) On Keynesian Economics and the Economics of Keynes, New York: Oxford University Press.
Patinkin, D. and Clarke Leith, J. (1977) Keynes, Cambridge and the General Theory, London: Macmillan.
Wattel, H.L. (ed.) (1986) The Policy Con sequences of John Maynard Keynes, Basingstoke and London: Macmillan.
This is the complete article, containing 338 words
(approx. 1 page at 300 words per page).
View More Summaries on Keynesian economics
