Rethinking keynesianism 10 years after the global crisis

Abstract

For many years Keynesian fiscal policy became very popular and was used by governments to fight slowdowns and recessions. In the 1980s and in the next three decades, this policy lost much appeal among economists in academia, though less among governments. The financial crisis of 2007–2008 and the following Great Recession brought a sudden revival of interest in and use of fiscal policies. This paper outlines the main criticisms that were directed at the Keynesian fiscal policy from the beginning. Some of these criticisms are less-known than others.