Keynes's Approach to Full Employment: Aggregate or Targeted Demand?
AbstractThis paper argues that John Maynard Keynes had a targeted (as contrasted with aggregate) demand approach to full employment. Modern policies, which aim to "close the demand gap," are inconsistent with the Keynesian approach on both theoretical and methodological grounds. Aggregate demand tends to increase inflation and erode income distribution near full employment, which is why true full employment is not possible via traditional pro-growth, pro-investment aggregate demand stimuli. This was well understood by Keynes, who preferred targeted job creation during expansions. But even in recessions, he did not campaign for wide-ranging aggregate demand stimuli; this is because different policies have different employment creation effects, which for Keynes was the primary measure of their effectiveness. There is considerable evidence to argue that Keynes had an "on the spot" approach to full employment, where the problem of unemployment is solved via direct job creation, irrespective of the phase of the business cycle.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Levy Economics Institute, The in its series Economics Working Paper Archive with number wp_542.
Date of creation: Aug 2008
Date of revision:
Contact details of provider:
Web page: http://www.levyinstitute.org
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-13 (All new papers)
- NEP-HPE-2008-09-13 (History & Philosophy of Economics)
- NEP-MAC-2008-09-13 (Macroeconomics)
- NEP-PKE-2008-09-13 (Post Keynesian Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Michael J. Murray, 2012.
"The Regional Benefits of the Employer of Last Resort Program,"
Review of Radical Political Economics,
Union for Radical Political Economics, vol. 44(3), pages 327-336, September.
- Murray, Michael/ M J, 2012. "The Regional Benefits of the Employer of Last Resort Program," MPRA Paper 35981, University Library of Munich, Germany.
- Zoltán Szalai, 2012. "A crisis of crisis management? Debates over fiscal adjustments in the European Monetary Union," MNB Bulletin, Magyar Nemzeti Bank (the central bank of Hungary), vol. 7(3), pages 57-66, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie-Celeste Edwards).
If references are entirely missing, you can add them using this form.