Keynesian Research Articles

A Keynesian Perspective to the Economy

In this paper, I examine the relationship between social welfare programs and unemployment. Unemployment and welfare are two of the most significant topics in macroeconomics, with many disagreeing on the relationship between the two. A commonly held belief, particularly in the United States, is that too generous of a welfare state discourages and disincentives people from looking for work, leading to continuous unemployment. However, my findings indicate that increased government spending on social welfare programs can actually improve employment rates. Looking at past studies conducted by economists in England, Germany, and the United States, I find that social assistance programs are beneficial at decreasing unemployment in the long term. Such programs allow workers to find and retain jobs for which they are prepared by allowing for increased training, increased search periods, and increased educational attainment for children. This research is heavily influenced by Keynesian theories and ideas that government should play an active role in the economy to reduce unemployment. While Keynes looked primarily at direct relief assistance for people in times of economic downturn, my findings expand on the idea and look at alternative policies that can be used to reduce unemployment continuously.

Robert Solow, eclectic American Keynesianism, and the Review of Keynesian Economics

Robert Solow, eclectic American Keynesianism, and the Review of Keynesian Economics

Liquidity, solvency and regulation in the Classical–Keynesian theory of crises*

Liquidity, solvency and regulation in the Classical–Keynesian theory of crises*

Factors Determining the Average Price Level: A Combined Microeconomic and Macroeconomic Approach

We analyze various determinants of the average price level using a strictly mathematical approach. Starting with the microeconomic perspective, we review the effect of demand shifters such as consumer income and the level of advertising on the average price level in a simple partial market equilibrium model. Then, we discuss the effect of supply shifters such as the exogenous tax level, worker wage, rental rate, and technology. We use implicit differentiation and Jacobian determinants. While government spending triggers inflation, taxes have the opposite effect. This is consistent with Keynesian theory. Money supply increases national income and prices while reducing the equilibrium interest rate. Therefore, money supply has pro-inflationary effects. The effect of money demand is the opposite—it increases the equilibrium interest rate, thereby lowering national income and prices. Augmenting the model to the level of international trade, we find that exports raise national income, the interest rate, and the average price level, while the effect of imports is just the opposite. Government spending raises the exchange rate while continuous inflation lowers it.

Examining the Interplay of Global Public Investment, Fiscal Sustainability, and Economic Dynamics: A Comprehensive Analysis

This study searches the intricate relationship between public investment, fiscal sustainability, and economic dynamics, exploring their connections, theoretical foundations, empirical evidence, and policy implications. It highlights the central role of strategic public investment in driving economic growth, maintaining stability, and fostering inclusive development, examining various theoretical perspectives such as neo-classical growth theory, Keynesian economics, endogenous growth theory, new institutional economics, and political economy perspectives to understand how public investment shapes economic outcomes. By synthesizing empirical evidence, the analysis demonstrates the positive association between public investment and critical economic indicators like growth, fiscal sustainability, productivity, and employment. It emphasizes the importance of targeted public investment in infrastructure, education, healthcare, and innovation in promoting economic prosperity and societal advancement. Moreover, drawing on case studies from diverse regions, the study provides insights into effective strategies for public investment and infrastructure development, highlighting their impacts and challenges. Policy recommendations stemming from the findings advocate for a holistic approach that includes strategic investment, fiscal responsibility, efficiency enhancement, inclusivity promotion, and international cooperation. These recommendations underscore the need to align public investment strategies with national development priorities, ensure fiscal sustainability through prudent management, enhance investment efficiency, foster inclusivity, and leverage global partnerships to tackle common challenges. By adopting these recommendations, policymakers can pave the way for sustainable development and prosperity, ensuring that public investment acts as a driver for positive economic and social change.

Public Sector Capital Expenditure and Tax Revenue Generation in Nigeria

Public sector capital expenditure is an important issue that cannot be ignored due to how it relates to tax revenue generation in Nigeria. This study examined the impact of public sector capital expenditure on tax revenue generation proxy by petroleum profit tax (PPT) in Nigeria. The baseline theory of this study is the Keynesian theory. The research design adopted in this study is the quasi-experimental research design. Secondary data was collected from the National Bureau of Statistics and CBN statistical bulletin. The multiple regression analysis based on the OLS method aided by E-view version 12 computer software was used to analyse the data, and the results were used to test the hypotheses. The findings showed positive significant relationship between the capital expenditure on road construction and PPT in Nigeria. It also revealed a significant positive relationship between capital expenditure on power, light and that PPT in Nigeria. The study revealed significant positive relationship between capital expenditure on security and PPT in Nigeria. Therefore, the study concluded that public sector capital expenditure played a vital role in improving tax revenue generation in Nigeria. The study recommends that since there is a positive relationship between capital expenditure on security, road construction and power with that of PPT, the variables should be sustained in this study. Government should look for means to solve the security challenges in the country, construct more roads, revolutionize electricity and power generation so as to enhance tax revenue generation in Nigeria.

Human Capital Development and Unemployment in Uganda: The Keynesian Theory of Unemployment in Perspective

Human Capital Development and Unemployment in Uganda: The Keynesian Theory of Unemployment in Perspective

The Historicity of Economic Sciences: The Main Epistemological Ruptures

The object of this work is threefold: it consists (a) in explaining and justifying, based on Foucault's concept of episteme, the epistemological foundations from which Classical Economics, Keynesian Economics and Neoclassical Economics were built; (b) in studying the nature of the epistemological ruptures that allow differentiating these schools; and (c) in defining the degree of incommensurability of these different paradigms. In the first part, I will define the main epistemological tools that allow studying the birth and evolution of science. In the second part, I will study the nature of the epistemological ruptures that characterize these evolutions and these different schools.

Government Expenditure and Economic Growth: A Comparative Analysis of Japan

Purpose: The aim of the study was to investigate the government expenditure and economic growth: a comparative analysis of Japan
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The comparative analysis of government expenditure and economic growth in Japan revealed a positive correlation between increased public spending and economic expansion. Strategic allocations towards sectors like education and healthcare were found to significantly contribute to long-term growth. Recommendations stressed the importance of transparent and accountable spending practices for sustained economic development, emphasizing prudent fiscal management and efficient resource utilization.
 Unique Contribution to Theory, Practice and Policy: Keynesian economics, wagner's law & endogenous growth theory may be used to anchor future studies on the government expenditure and economic growth: a comparative analysis of Japan. Develop a comprehensive framework for evaluating the effectiveness of government expenditure policies in Japan. Fiscal Sustainability Strategies: Develop strategies for ensuring the long-term sustainability of government finances in Japan, given the challenges posed by an aging population and rising healthcare costs.

The Role of Government Intervention in Mitigating Economic Shocks

Purpose: This study sought to explore the role of government intervention in mitigation economic shocks.
 Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library.
 Findings: The findings reveal that there exists a contextual and methodological gap relating to the role of government intervention in mitigating economic shocks. Preliminary empirical review that government intervention plays a crucial role in stabilizing economies during periods of turbulence. Through an exploration of theories such as Keynesian economics, Monetarism, and New Classical Economics, it was found that a balanced approach utilizing both fiscal and monetary policies is effective in responding to economic challenges. Sector-specific impacts were also highlighted, showing that targeted government support, such as subsidies and effective regulation, can enhance resilience in sectors like manufacturing and energy. The study's findings suggest that policymakers should adopt evidence-based strategies to navigate economic uncertainties and promote sustainable growth and stability.
 Unique Contribution to Theory, Practice and Policy: Keynesian Economics, Monetarism and the New Classical Economics model may be used to anchor future studies on the role of government intervention in mitigating economic shocks. The study made significant contributions by offering recommendations for policymakers and practitioners. It enhanced economic theory by synthesizing Keynesian economics, Monetarism, and New Classical Economics, providing insights into effective policy responses to economic crises. The study emphasized the importance of targeted government spending, a combination of monetary and fiscal policies, clear guidelines for bailouts, and building economic resilience through diversification and innovation. It also highlighted the need for stable regulatory frameworks, addressing inequality, and taking a holistic approach to policy-making. These recommendations have guided past policy decisions, helping to promote economic stability and resilience.
 Keywords: Government Intervention, Economic Shocks, Keynesian Economics, Monetarism, Fiscal Policy, Monetary Policy

Revisiting investment and its determinants through threshold analysis

AbstractSince the time of classical economists, investment decisions hold centre stage in economic theory. In this article, we integrate classical economists' perspectives on the determinants of investment with the Keynesian theory of effective demand. For this purpose, we employ variables to capture the effects of profitability, the state of demand, and the financial and risk conditions using time series data from 17 major OECD economies spanning the 1960–2017 period. Two are the salient features of our article: The first is the use as profitability variables, the marginal efficiency of capital or the incremental rate of return, and the second is the use of regime changes and respective threshold values for these two key variables. The econometric results show that the profitability variables are decisive in shaping investment decisions and designating phase changes.

Integrating Latin America into the Global Economy: Strategies for Regional Economic Development

The 1990s marked a transformative era for Latin American economies, characterized by significant political and institutional reforms aimed at increasing trade and financial openness. The economic development model adopted during this period emphasized market-led growth through liberalization measures, significantly reducing the state's role in the economy. However, by the decade's end, the anticipated economic and social benefits had not materialized in many countries, prompting a reevaluation of development policies. This paper revisits the theoretical frameworks proposed by the Economic Commission for Latin America and the Caribbean (ECLAC), grounded in Keynesian economics and a historical-structural methodology. ECLAC's analysis focused on the implications of deregulation and the liberalization of economic and financial policies, advocating for a regional development strategy that balances economic growth with equitable income distribution, employment opportunities, technological advancement, and social fairness. By analyzing Latin America's integration into the global economy in the 1990s, this study explores ECLAC's theoretical perspectives as viable alternatives to the reforms implemented during that period. Employing a bibliographic and reflective analytical approach, the paper underscores ECLAC's contributions to understanding the socioeconomic challenges and opportunities facing the region.

Intensive and Extensive Margins of Labor Supply in HANK: Aggregate and Disaggregate Implications

AbstractThis paper studies how adjustment along intensive and extensive margins of labor supply affects aggregate and disaggregate effects of monetary policy. To this end, I develop a heterogeneous‐agent New Keynesian (HANK) economy where a nonlinear mapping from hours worked into labor services generates operative adjustment along intensive and extensive margins of labor supply. I find that monetary policy has significantly different effects on earnings inequality, depending on the extent to which margin is dominant, even if it generates similar aggregate responses.

Assessing the Impact of Foreign Direct Investment on Unemployment Rate in Nigeria

Recent studies have shown that high rate of unemployment as currently witnessed in Nigeria, is one of the factors that can undermine the attainment of goal eight (Decent work and Economic growth) of Sustainable Development Goals (SDGs) by year 2030. Since foreign direct investment (FDI) is an important factor in creating jobs and improving economic growth, it is considered a veritable tool for reducing the unemployment level. Although there have been studies on FDI and unemployment in literature, there is hardly any study on the impact of FDI on rural and urban unemployment. The study pursued threefold objectives which are to ascertain the impact of FDI on aggregate unemployment in Nigeria; to examine the impact of FDI on urban unemployment rate in Nigeria and to determine the impact of FDI on rural unemployment in Nigeria. The study utilized data from 1990 to 2020 as well as dynamic ordinary least squares (DOLS) which eliminates problems of endogeneity and serial correlation. The theoretical framework of the study is anchored on the Keynesian theory of unemployment. The result obtained showed that FDI has a significant impact on aggregate and urban unemployment in Nigeria. However, FDI did not impact significantly on rural unemployment in Nigeria. To effectively use FDI to reduce unemployment, the Nigerian government needs to create an enabling business environment, including favorable investment policies, streamlined regulatory procedures, and infrastructure development plans. Encouraging collaboration between foreign investors and local stakeholders, promoting technology transfer, and implementing strategies to enhance the skill levels of the local workforce are also important aspects to consider.

ЭТИКА И МОРАЛЬ В СОВРЕМЕННОМ БИЗНЕСЕ: АКТУАЛЬНОСТЬ И ИСТОРИЧЕСКИЙ АСПЕКТ

In this article the author reflects on the application of ethical principles in the business environment, starting with the definition of business ethics and considering the approaches of various schools of thought to the presence of an ethical component in the entrepreneurial activity. The author provides a wide range of arguments against the view that the goals of business should be primarily growth and profit and that ethical principles of business are secondary or irrelevant. The article provides a historical overview of the development of philosophical and ethical thought in this regard and, in particular, briefly formulates the key views on this topic of the ancient Greek philosophers Plato and Aristotle, the medieval philosopher Thomas Aquinas, the mercantilists of the 17th century, Bernard Mandeville and Adam Smith in the 18th century, John Keynes in the first half of the 20th century, as well as some modern authors and figures. In conclusion, the author states a strong increase in the role of moral assessments and ethical formulations in business at the present time and formulates the idea that the ethical side of a company’s activities is beginning to approach the classical factors of production in importance. However, the author questions the sincerity of thinking about business ethics in modern society.

Expedience and experimentation: John Maynard Keynes and the politics of time

AbstractJohn Maynard Keynes is often seen as the quintessential thinker of the short run, calling on us to focus our intellectual and material resources on the present. This poses an intriguing puzzle in light of Keynes's own influential speculations about the future. I use this seeming tension as an opening into Keynes's politics of time, both as a crucial dimension of his political thought and a contribution to debates about political temporality and intertemporal choice. Keynes's insistence on radical uncertainty translated into a skepticism toward intertemporal calculus as not only morally objectionable but also at risk of undermining actual future possibilities. Instead of either myopic presentism or calculated futurity, Keynes advocated bold experimentation in the present to open up new possibilities for an uncertain future. This points to the need to grapple with how to align multiple overlapping time horizons while appreciating the performativity of competing conceptions of the future.

IN SMUGGLE WITH CLIMATE CHANGE, EXTRA–BUDGETARY FUND APPLICATION AS AN INSTRUMENT OF GREEN KEYNESIAN ECONOMIC POLICY

Green Keynesian Economics, which is a postmodern reflection of Keynesian economic thought, suggests that negativities, which are possible for environmental problems causing climate change to lead to, should be solved by active role public sector will undertake. As known, carbon emissions, emitted to atmosphere in global scale, may cause climate change via greenhouse effect. This case leads country economies to face to a set of problems. Green Keynesian Economics suggests a mix of simultaneous sustainable policies as a solution for a set of problems under consideration. The aim of this study is to suggest a financial instrument taking place in the scope of Green Keynesian School for Türkiye targeting to achieve net zero carbon emission as of the year 2053.

Inflation surprises in a New Keynesian economy with a “true” consumption function

AbstractThe resurgence of inflation has been accompanied by a reversal of prospects of growth, with a prominent role assigned to the fall of households' purchasing power. Yet this real income effect of inflation surprises, independent of restrictive monetary policy, is not present in the standard New Keynesian models for monetary policy. The reason lies in the formulation of the consumption‐based “IS equation”. The paper shows how the income effect can be introduced by reformulating the consumption function, with the consequence that it exerts an autonomus stabilization effect on inflation. The main monetary policy implications are examined by means of simulations.

James Tobin on macroeconomic instability: an old Keynesian changes ground

From 1975 onwards, the American Keynesian monetary economist James Tobin changed his interpretation of the Keynesian case that active stabilisation policy is sometimes needed to restore full employment, offering a new interpretation that drew on Keynes’s General Theory (Chapter 19) and on Irving Fisher’s 1933 debt-deflation theory of depressions to argue that wage and price flexibility could be destabilizing. Tobin’s very first journal article in 1941 attributed the existence of involuntary unemployment in a Keynesian economy to money wage rigidity and money illusion, as he also did in 1947. From 1975 onwards, Tobin responded to New Classical critiques of Keynesianism by absolving Keynes from assumptions of irrational money illusion or unexplained wage rigidity, arguing instead that Keynes assumed a given money wage in the first eighteen chapters of his General Theory for simplicity of exposition and as a policy recommendation. Like Hyman Minsky and Peter Howitt, Tobin stressed the previously underappreciated Chapter 19 of The General Theory, where Keynes argued that faster adjustment of prices and money wages could be destabilising. The basis of Keynesian macroeconomics was coordination failure and instability, not irrational money illusion or an arbitrary assumption of a fixed money wage. The most important aspect of this discussion of debt-deflation and of macroeconomic instability and coordination failure came through the attention to Keynes’s Chapter 19, Fisher, Minsky, and Tobin in Ben Bernanke’s dissertation on the breakdown of financial intermediation in the US culminating in the 1933 Bank Holiday and in Mervyn King’s 1994 European Economic Association presidential address on debt-deflation. This intellectual preparation shaped the response of Bernanke and King to the Global Financial Crisis of 2007-2009, when they placed absolute priority on preventing a debt-deflation spiral that would take the economy out of its corridor of stability. Presented to the Nice workshop on “Coordination Issues in Historical Perspective,” September 9, 2022. We are grateful for helpful comments from Peter Howitt, Goulven Rubin and other participants there and at a workshop in memory of Jerome de Boyer des Roches at the University of Paris I Panthéon-Sorbonne in June 2022 and from two anonymous referees.

Government Expenditure and Economic Growth in Tanzania

This study examines the impact of government expenditure on economic growth, focusing on health, infrastructure, education, and agriculture in Tanzania. The data from 1970–2020 were analysed using the STATA software. Government expenditure on education, health, agriculture, and infrastructure sectors were the independent variables, while GDP was the dependent variable. Wagner’s law of increasing state activity and Keynesian economic theory were used to guide the study. Unit root test and Johansen co-integration test were conducted. The Johansen co-integration test results indicated the absence of a long-run relationship between all explanatory variables and economic growth. However, the ARDL model revealed that government health expenditure had a low effect on economic growth compared to infrastructure, education, and agriculture expenditures; all of which had higher effects. The study recommends that more government resources be spent on substantial infrastructure.