Macroeconomics (Keynes)
Keynes's General Theory (1936) argues that total spending, not wages alone, decides output and jobs, so governments can fight slumps with public spending and low interest rates.
Open in the interactive tree →Written in the Great Depression, the book denied that markets return to full employment by themselves. Keynes added the spending multiplier (from Richard Kahn's 1931 paper), liquidity preference and investment driven by shifting expectations, which he called animal spirits. Keynesian models were the standard framework for policy in rich countries from 1945 to about 1973, lost ground in the 1970s stagflation and returned in the stimulus programmes of 2008-09. In 1944 Keynes led Britain's side at Bretton Woods with a plan for an International Clearing Union that the US rejected.
Prerequisites
- Central Bank & State Currency1694Interest rates and the money supply are central to its argument.
- Economics1776It takes classical economics as its target and starting point.
Unlocks
- Bretton Woods, IMF, World Bank1944Keynes led the British side and proposed the International Clearing Union.