Keynesian Economics

Macro tradition holding that deficient aggregate demand can keep an economy below full employment.

Specifications & Metrics

era

1936 onward

founders

John Maynard Keynes

signature

Aggregate demand and fiscal stabilization (General Theory, 1936)

Core Principles & Analysis

• The General Theory (1936) broke with Say's law and self-correcting markets.
• The spending multiplier turns an initial injection into a larger change in income.
• The post-war neoclassical synthesis merged it with classical long-run theory.

Sources

• Econlib Concise Encyclopedia of Economics: Keynesian Economics