Keynes Macroeconomics Keynesian Theories

Keynes - "The Macroeconomics", Keynesian Macroeconomics

Keynes Definition, Theories and Analysis

John Maynard Keynes was the son of intellectual parents. His father was a logician and political economist, and his mother was a justice of the peace, an alderman, and a mayor of Cambridge. Keynes studied under Marshall at Cambridge. At twenty-eight, he became the editor of the Economic Journal and managed the investments of its publisher. Throughout his career, Keynes was known for his financial brilliance and advised and represented many organizations including the International Monetary Fund, the British Treasury, and the Bank of England. He accumulated his own fortune of half a million pounds through his dealings in foreign currencies and commodities (Harrod, 1951).

In this chapter, we take a look at the Keynesian School of economic thought -an ideology that grew out of anxieties from and reflections of the Great Depression. Keynes's main thesis was that laissez-faire economics was increasingly becoming invalid and that there was a very strong need for active government intervention to achieve and maintain full employment. By lowering interest rates to stimulate investment and purposely engaging in deficit spending and redistributing income to stimulate consumption expenditure, government could be used as an effective tool to attain full employment and restore an economy to full strength. This ideology today is known as "Keynesian" economics.