Keynes, Keynesians and Contemporary Monetary Theory and Policy: An Assessment
AbstractThere has been no Keynesian Revolution in economic theory but there has been an unacknowledged Keynes's Revolution in economic policy. Keynes's theoretical revolution rested on the adoption of monetary analysis and the application of the principle of effective demand to demonstrate the existence of multiple long-period equilibria. Keynes's policies - creating a role for `Big Government' and the `Big Bank' - follow from his theory and have changed the structure of the laissez faire economy. Many Keynesians fail to acknowledge either of these issues and continue the classical tradition of real analysis and the assumption of unique long-period equilibrium. Real analysis, as a special case of Keynes's monetary analysis, provides a distorted perspective of the responsibilities of monetary policy which largely accounts for the increasing fragility and volatility exhibited by financial markets over the past two decades.
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Bibliographic InfoPaper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2008-05.
Length: 36 pages
Date of creation: 2008
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-29 (All new papers)
- NEP-CBA-2008-09-29 (Central Banking)
- NEP-HPE-2008-09-29 (History & Philosophy of Economics)
- NEP-MAC-2008-09-29 (Macroeconomics)
- NEP-MON-2008-09-29 (Monetary Economics)
- NEP-PKE-2008-09-29 (Post Keynesian Economics)
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