Keynesian Theory Essay

1575 WordsAug 8, 20127 Pages
The Implications, Benefits and Concerns for a Keynesian Economy in the United States and its Effect on Economic Policy Abstract This paper explores five published journal articles in which the authors give their views and reasoning as to why we should or should not follow a Keynesian based theory of economics as applied to our modern day Economic Policy in the United States. All of the articles are different in their approach on exactly how John Maynard Keynes theory of economics should be applied and adapted into our current United States Economic Policy. Moreover, we will look at why the United States is once again looking to redesign its economic policies in line with Keynes theory as a result of the 2008 – 2009 financial crises and bailout. Views on fiscal stimulus and monetary policy that Keynes expressed in his General Theory are beginning to make a comeback in light of the economic downturn in recent years. Pressman (2007) states that Keynes advocated using the power of the state to improve macroeconomic performance. Keynes saw the state as an integral part of the economy and a positive force that could and should be used to improve overall economic performance (Taylor 2010). On the contrary Garrison (2002) states that if interest rates are used as a policy tool for abetting and abating investor optimism, they cannot at the same time perform their growth-governing function as envisioned by the classical economists. Believing, as Keynes did, that interest rates do not do their job gives license to a policy regime in which indeed those rates cannot possibly work. This paper looks to dissect the view points from our selected authors and offer up discussion on the role Keynesian economic policy plays in the United States economy today. The Implications, Benefits and Concerns for a Keynesian Economy in the United States and its Effect on Economic

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