Monetary Theory And Public Policy Kenneth Kurihara.pdf
This page was last edited on 29 September 2015, at 05:41. Other versions of this page. Monetary Theory And Public Policy Kenneth Kurihara (Paperback) Download Kurihara Pdf With a history of a little over 60 years, it is no wonder that the development of the post-Keynesian literature can be traced back to the years following the outbreak of the Second World War. These years saw a marked change in the political climate, in which the Great Depression of the 1930s was followed by a decade of political and economic discontent that culminated in the Second World War. For post-Keynesians, however, the war was a moment of considerable optimism, as the collapse of capitalism seemed all but certain. With the restoration of economic normality, there was a feeling that a new political order would take shape. This new order, however, was gradually replaced by a new period of political and economic uncertainty as the various parties to the conflict started to emerge into the new post-war world. The Keynesian Revolution As the economic climate was changing, the main Keynesian theory developed around a concept known as the Keynesian Revolution. The basic idea is that the Great Depression can be explained by a fall in aggregate demand for goods and services. Keynesian economists therefore see the cause of the depression as being the fall in aggregate demand. The reduced demand leads to lower output and employment, and is therefore a cause of the Great Depression. To combat the depression, Keynesian economists therefore advocate government spending. Great Depression Keynesian economics was already well established by the 1930s. Keynesian economics was initially established in the 1930s by economist John Maynard Keynes, who was concerned about the large increase in government spending. Keynes predicted that a large increase in government spending would be required to combat unemployment, as he did not believe that the private sector could recover through its own efforts. His article ‘The General Theory of Employment, Interest, and Money’ (1936) contained an analysis of the issue of aggregate demand. Kurihara (Ken) From this analysis, he argued that aggregate demand is not a constant, but is affected by a number of forces. These are, among others: changes in the interest rate, changes in the price level, changes in the quantity of money, and changes in population growth and technological progress. Therefore, to combat the effects of the depression, it is necessary to increase aggregate demand through an increase in government spending.