Keynesian Research Articles

A New Philosophy For Sustainable Consumerism

With growing awareness of unsustainable practices, communities are forcing the business and governments to take serious steps towards sustainability. Microplastics are entering the food chain and eventually reaching humans (Barboza, Vethaak, Lavorante, Lundebye, & Guilhermino, 2018; Mercogliano, Avio, Regoli, Anastasio, Colavita, & Santonicola, 2020) The threat of global warming and recurrent climate disasters necessitate immediate action. However, all governments and corporations rely on 'increase in demand’ as a metric of growth, which prevents them from doing anything meaningful to ensure our planet’s long-term viability. Against the above paradox, this article tries to discover a compromise between sustainability, consumption, and economic growth. It is a theoretical framework for proposing a solution in which businesses can expand in tandem with our planet’s long-term future or a glance through the areas where the Keynesian economy can coexist with environmentalists’ concerns. The proposed framework claims significance in terms of practicality than the perfection of a solution.

Potential Consequences of a Change in Money Wage Under Keynesian Macroeconomics Theory

This research paper has delved into wage dynamics and economic health. The author has chosen to juxtapose the Keynesian macroeconomics theory with that of the classical, aiming to critically examine the contrasting viewpoints of classical and Keynesian economic theories. The core of the analysis hinges on the Keynesian framework introduced by John Maynard Keynes, particularly with its stance on the implications of changes in nominal wage on the broader economy. Historical instances witnessing substantial wage fluctuations serve as real-world examples to substantiate the theoretical discussions, intending to uncover the causal factors and subsequent economic responses to these wage changes. To further bolster the inquiry, the study employs macroeconomic mathematical modelling to furnish quantitative insights that elucidate Keynesian assumptions on the labour market and its implications. By concentrating on the macroeconomic repercussions of nominal wage changes, as opposed to microeconomic consequences, this paper sheds light on the broader implications of wage adjustments in an economy, underpinned mainly by Keynesian perspectives.

Mobile Keynesianism: Linking policy mobility and state transformation in New Zealand, 1930–70

AbstractThe study of policy mobility has revealed the rich geographical life of policy, demonstrating the very real ways in which policy enacted in one place often references policy enacted elsewhere, and how in doing so, it changes and evolves as it is constantly adopted and adapted. One of its contributions has been the elaboration of neoliberalism as an interconnected process of neoliberalisation producing its variegated geography. But the policy settlement that neoliberalism replaced in the capitalist world, Keynesianism, is still approached in comparative or institutional terms rather than as a process. Applying a policy mobility lens to the study of Keynesianism is an opportunity to correct this. But this historical case is also an opportunity to consider policy mobility anew. Drawing on the relational urbanism that also contributed to policy mobility studies, this paper builds on topological approaches to argue for analysing mobile policy as a consequence and cause of the reworking of relations between and within policy territories. Using the Keynesian policy shift that occurred in New Zealand between 1930 and 1970 as a case study, it shows how relations were transformed but ongoing, and these transformations are both driven by and a consequence of mobile policies; that Keynesianism as an international phenomenon was a reworking of relations necessarily both between and within territories; and that Keynesianism produced a space of technical expertise and authority that continues to shape policy today.

Economic Growth and Policy Dynamics in Contemporary China: A Comprehensive Analysis and Future Outlook

The Chinese economy has grown dramatically over the past few decades. China's economic rise is particularly intriguing because it defies conventional economic models and has been driven by unique policies and dynamics. Nevertheless, in a world characterized by increasing protectionism, international trade tensions, and changes in investor sentiment, the sustainability of China's economic growth model has come into question. Chinese policymakers should navigate these shifts as investors reconsider their positions and countries protect their domestic industries. This paper investigates the policy dynamics that have contributed to the rapid economic growth in China. It also describes the various economic models that can describe the Chinese economic model. The paper reveals s that consumption, investments, and exports are the major drivers of economic growth in China. Consumption in retail sales is robust and is projected to keep increasing yearly into the future. Keynesian theory asserts that aggregate demand is the most important driving force in an economy. As such, the aggregate demand for consumer goods by government, businesses, and households is high in China. Investments are also a major driver in creating gross fixed capital. Investments from a neoclassical perspective show that investors are concerned with maximizing The conclusion shows that in a world where countries are increasingly protective of domestic industries and also where investors are withdrawing from China, policymakers will have to focus on internal growth and consumption as the driver of economic growth.

Inflation expectations and consumer sentiments of the Urals population

In recent decades, central banks of an increasing number of countries have been using the inflation targeting regime in their monetary policy, since it has proven to be an effective tool for balancing economic growth and inflation. In countries with the regional heterogeneity, local manifestations of inflation may differ significantly, which entails a shift in inflation expectations and their unequal impact on actual dynamics of prices in the future. The article explores the determinants of inflation expectations in Ural regions of Russia. The methodological basis of the study includes monetary concepts developed primarily within the framework of the new Keynesian theory and linking monetary policy with the assessments of inflation expectations. The study uses methods of statistical processing of the data collected during two rounds of monitoring of the population’s inflation expectations. The evidence of the study comes from the surveys conducted on a sample of 2,976 respondents. The study reveals regional, social and allocative heterogeneity in the perception of dynamics of prices and the formation of inflationary expectations. The results of the study contribute to understanding the nature of inflation expectations using the case of the Urals population and can become a basis for developing targeted communication measures aimed at bringing inflation closer to the target.

Analysis of Italian Economic Fluctuations Based on Keynesian Framework

After the coronavirus-caused global recession, governments implemented various contingency measures to revive their economies worldwide. Despite improving digital marketing and international business relations, adverse effects still need to be addressed, and the issue takes time and money to resolve. Italy is one of the EU's most economically powerful countries, but COVID-19 has hit it hardest. This article will analyze relevant data and examine the causes of statistical fluctuations to explain Italy's economy. There are various reasons why Italy was so heavily infected. This study uses the concept of aggregate demand in Keynesian economics to analyze Italys economic model and gross domestic product (GDP) composition. In addition, by looking at the policies and other influential factors, the paper explores the current economic situation the Italian government is in. By providing some overview and further explanation of the data, the paper underscores that Italy has made a remarkable recovery after COVID-19 using investment support. However, the government is now too dependent on it, and its GDP structure has to change to improve its performance in solving the surging public debt and deficit issues.

Keynes and the drunkard under the lamp post: Making sense of Palley

In a recent article, Tom Palley begins his critique of Keynesian economics with the wellknown story of a drunkard who, when searching for his lost keys, looks not in the darkness of the nearby lawn where he misplaced them, but instead under the light cone of a lamp post because, when asked, he replies that’s where the light is. This story serves as a metaphor for the field of economics attempting to understand the workings of the capitalist economy solely through the lens of Keynesian economics. However, this endeavor is ultimately futile as comprehending capitalism requires a different analytical approach: acknowledging social conflict as an essential component of capitalism’s nature better addressed by Kaleckian macroeconomics. We attempt to illustrate that Palley is accurate in emphasizing the paradigmatic differences and even incommensurabilities between Keynes’ monetary production paradigm and the Marxian-Kaleckian social conflict paradigm. This suggests that any classification under the umbrella term “post-Keynesianism” is misleading. However, Palley is mistaken in his assertion that this distinction aligns Keynes’ economics with neoclassical (mainstream) economics, as the acceptance or rejection of social conflict is not the only fault line in terms of ontology. There are other ontological divisions that can exist. Or, to use our metaphor, the lamp post can be moved to different areas of the lawn, indicating different ontological perspectives.

The Modernity of Keynesian Thinking on Economic Policy from an Institutional Perspective

The objective of the paper concerns the analysis of Keynesian thinking on economic policy from an institutional perspective, since Keynes ignores both institutions and the possibility that a modification of them might change the way expectations are formed. Specifically, the relationship between expectations and economic activity will be examined, taking into consideration the concept of an agent formulating expectations. It will be emphasised how an institutional orientation can help the application of Keynesian economic policies by setting aside individualistic and psychological principles, on which Keynesian thinking is based, and incorporating an institutional and historical examination of political and economic institutions into expectations. This represents an attempt to incorporate the institutional dimension into Keynesian doctrine to strengthen it, without placing the individual at the core of the analysis. For example, the issue of the rigidity of monetary wages highlighted by Keynes in chapter seventeen of the General Theory will be interpreted from an institutional perspective. Indeed, rigidities and customary practices are important in reducing uncertainty and promoting efficient decision-making. It is precisely on uncertainty that individuals acquire knowledge based on their involvement in social practices and observation of the habits that form the structure of social and economic life.

Fiscal Policy from Keynes to Lucas

There are two crucial turning points in the history of modern macroeconomics. The first is the period from the 1940s to the 1970s, during which Keynesian Macroeconomics was the domi¬nant theory. The second turning point is the emergence of New Classical Macroeconomics in the early 1970s, which became the prevailing paradigm from the 1980s onwards and still holds significant influence today. The aim of this paper is to analyze the transformation of discretionary economic policies in general and fiscal policy in particular, in the process from the Keynesian revolution to the Lucasian revolution.

Implications of population growth on unemployment in Nigeria: Testing the Malthusian and Keynesian Theories

Implications of population growth on unemployment in Nigeria: Testing the Malthusian and Keynesian Theories

Animal spirits, bankruptcies, and monetary policy effectiveness in a hybrid macroeconomic agent-based financial accelerator model

This paper develops a hybrid model with an agent-based financial accelerator framework embedded in a standard new Keynesian economy. It explores the interactions between the financial accelerator and the credit market, focusing on the effects of bankruptcy. The paper replicates credit-market relationships, modeling various credit crunch scenarios. It uncovers endogenous fluctuations and “animal spirits” in entrepreneurs’ expectations, driving investment and production decisions. Notably, higher pro-cyclical leverage can have destabilizing effects in the presence of small shocks, increasing entrepreneurs’ bankruptcies. The results suggest that monetary policy’s effectiveness in stabilizing fluctuations depends on factors such as heterogeneity, bounded rationality, and heuristic updating mechanisms. Moderate monetary policies perform better in terms of economic growth with moderate-to-low volatility, while aggressive policies on inflation assist bounded rational agents in reducing errors in investment decisions and default rates, fostering a more stable macroeconomic environment. Increasing forecasting options introduces diversification among entrepreneurs, reducing volatility and stabilizing investments. More options mitigate investment fluctuations, acting as a counterbalance to prevailing market sentiments. Over time, individuals weakly adhering to trends or adopting contrarian approaches come to dominate the population of entrepreneurs, enhancing the overall stability of investment decisions.

James Tobin on Overlapping Generations Models and the Microeconomic Foundations of Macroeconomics Reconsidered

The American Keynesian economist and Nobel laureate James Tobin entitled his contribution to the inaugural issue of Journal of Money, Credit and Banking “A General Equilibrium Approach to Monetary Theory” (1969) yet he was sharply critical of the version of general equilibrium analysis used in the now-prevalent dynamic stochastic general equilibrium (DSGE) approach to macroeconomic modeling. He also rejected claims that overlapping generation (OLG) models provided a choice-theoretic foundation for the holding of fiat money, denying that the assumption that people held fiat money because no other asset existed was less arbitrary than allowing costs of transactions between assets to be non-zero. Yet, while not accepting OLG as the explanation of why people hold fiat money, Tobin, in a series of articles from 1967 to 1983 (some joint with Walter Dolde), placed the life-cycle model of consumption and saving (whose origins he attributed to an earlier Yale economist, Irving Fisher) into an OLG setting. This article examines Tobin’s critiques of DSGE and OLG modelling in macroeconomics, what he meant by “a general equilibrium approach to monetary theory,” and his contribution placing the life-cycle model in an OLG setting.

Multiplier of consumer expenditures in the model of economic management of water resources of the Kyrgyz Republic

The expenses of the population are one of the main factors determining aggregate demand, which creates the basis for the reproductive process and economic development of the state. The volume of aggregate demand in the Kyrgyz Republic is largely determined by the development of trade and economic cooperation with China. This justifies the relevance of assessing their impact on economic growth against the background of new challenges of various kinds in the conditions of unstable social and economic development of Kyrgyzstan. The relations of trade indicators with China and GDP, the value of final consumption of Kyrgyz households as part of GDP in comparison with other countries are shown. The calculated indicators of marginal propensities to consumption and saving are analyzed; the multiplier of expenditures for Kyrgyzstan. A noticeable dependence of the indicator of economic development and foreign trade activity with the use of statistical and economic-mathematical methods with an acceptable coefficient of elasticity has been revealed. Conclusions are drawn about the impact of consumer spending on aggregate demand and changes in GDP, about the correspondence of real processes to the Keynesian theory of the investment multiplier and individual deviations from it in a developing economy.

Revenue Leakages and their Implications on the Nigeria’s Economic Development

This seminar paper examines revenue leakages and their implications on Nigeria’s economic development. Government revenue includes income from both oil and non-oil sources. Despite being one of the most developed and blessed countries, Nigeria is still grappling with persistent poverty and weak economic growth. The study investigates the major sources of revenue in Nigeria and explores the causes of revenue leakages affecting the country’s economic development. It also assesses the consequences of these leakages on the Nigerian economy. The paper applies the Keynesian theory proposed by John Maynard Keynes, suggesting that to achieve economic growth through taxing and government spending, policies need to be in place to generate necessary revenue for the country. Using an ex-post facto research design and relying on secondary sources of data like government and non-government publications, magazines, and journals, the study reveals that revenue leakages in Nigeria can hinder economic development by reducing government revenue, burdening citizens, and fostering corruption and inefficiency. The research also uncovers various methods through which revenue contributes to the economy. As a result, the study recommends the implementation of better governance and transparency policies to enhance financial transactions, budgeting procedures, and public procurement processes. These measures are crucial for addressing the identified challenges and promoting a more robust economic environment in Nigeria.

A Study on the Factors Influencing Household Consumption from a Money Demand Perspective: Evidence from Chinese Urban Residents

Based on the classic Keynesian theory of money demand and city panel data, in this study, we investigate the impacts of different money demand motives on urban household consumption in China, and provide ideas for promoting sustainable growth in household consumption in China. The results of this study show the following: First, in general, the theory of money demand motivation can adequately explain household consumption in large and medium-sized cities in China. Second, the CPI time series has a significant adverse effect on the real money demand of most households. Third, residents significantly reduce food consumption to satisfy speculative money demand for financial instruments, and the lower the income level, the keener households are to invest in high-risk stocks. Fourth, even for high-income households, the precautionary money demand generated via the purchase of commercial insurance still has a significant crowding-out effect on their total consumption. Social security spending, which reduces the precautionary money demand of households, has a much more positive impact on high-income households.

Market Mechanisme and Systematics in the Frame of Islamic Economics

The purpose of this study is to examine mechanisms and systematics from an Islamic economic perspective. This study uses a descriptive research design with four features: direct reading, library data, and secondary sources, and is not limited by space or time. The results of the analysis explained that Malikiyah scholars limit profit-taking to a maximum of one-third of capital, while Wahbah al-Zuhaili and al-Ghazali agree that proper profits should not exceed one-third of capital. Islamic economics emphasizes the importance of spiritualism and prohibits hoarding money and consuming other people's riches for vanity. Indonesia's government intervenes in price control to protect consumers, communities, and producers. Keynesian theory suggests that government intervention is necessary to lift a country out of recession and manage social and environmental impacts. Policies for government engagement are evolving and reacting to market realities.

MACROECONOMIA DO DESENVOLVIMENTO: UMA PERSPECTIVA KEYNESIANA, JOSÉ LUÍS DA COSTA OREIRO

In Brazil, Professor José Luís Oreiro is considered one of the most talented and productive Keynesian economists of his generation. Prof. Oreiro was hired by the Department of Economics at the Federal University of Paraná in 2003, when I came into touch with some of the theories organized in this book. This book written by Oreiro presents the debate around development macroeconomics from a Keynesian perspective, which is a new and particularly important topic for those who wish to understand a little more about macroeconomics, growth, and economic development. The main contribution of the book Macroeconomia do Desenvolvimento: Uma Perspectiva Keynesiana is to demonstrate that, for Keynesian theory, macroeconomic policies traditionally more related to business cycles, have effects on long run growth and development. Short run policies affect the long run, because aggregate demand is considered the engine of long-run growth (Keynes, 1982)...

Why Active State Measures Have Dominated Regional Policies in Norway by Governments of all Colours: A Historical Review and Comparison with Sweden

This article compares regional policies in Norway to regional policies in Sweden. The article suggests that geographical and geopolitical factors are the main factors that have influenced regional policies. The article points out that the government in Sweden, immediately following WW2, also assumed the role of the active state. However, in contrast to Norway, its policies were disadvantageous to northern Sweden. Later, Swedish governments also implemented policies aimed at strengthening the economic and social conditions in the north. The article demonstrates that even bourgeois governments, who are traditionally ‘less-state-more-market’ oriented than social democratic governments, have used active state measures in their regional policies in Norway. The article points out that geographical and geopolitical factors represent interests that are shared by Norway’s centre and periphery and argues that these factors work as political guidelines that fundamentally influence the continuous use of active state policies by bourgeois governments. It concludes that this influence is stronger than bourgeois governments’ ideological foundations, Keynesian economics and the bureaucracy. Northern Sweden, in comparison, lacks the geographical and geopolitical factors of northern Norway, which explains why fewer active state measures have been used by governments in Sweden than in Norway.

Economic Policy Responses to Covid-19 and Expenditures on Domestic Travel: International Evidence

In response to the unprecedented circumstances resulting from the COVID-19 pandemic, various national government policies were implemented to reduce the serious economic damage caused by the pandemic and attempts to control it. These policies generally aimed to kick-start domestic-led recoveries in many sectors. This study examines how different types of fiscal measures adopted by governments in response to this pandemic are associated with the growth of expenditure on domestic travel in 2020. Utilizing data from 76 countries and applying OLS estimator and 2SLS regression (which mitigates the potential endogeneity problem), the study shows that governments’ additional spending and tax reductions (especially in non-health sectors) positively contributed to rising expenditure in domestic travel destinations. Similar results are found for countries that are very reliant on tourism. Our findings lend empirical support for Keynesian theory’s prediction concerning the effect of government spending and tax reduction on household consumption behavior in the short run, particularly during periods of economic stress and uncertainty.

Government expenditure and economic growth nexus: How valid is Wagner’s law in the Nigeria situation?

This study specifically aims at verifying if Wagner’s law is consistent with the Nigerian situation by adopting the ARDL method. Findings from the estimation prove that Wagner’s law is a fallacy in Nigerian experience. In contrast, the Keynesian theory of national income is applicable to the economy of Nigeria, as demonstrated by the strong positive impact of government expenditure on economic growth. Equally important, FDI inflows demonstrate a strong positive relationship with the economic growth of Nigeria. Note that Nigeria went into recession recently and is now going through the recovery stage. This, in line with the findings, calls for the adoption of an expansionary fiscal policy in order to stimulate aggregate demand and, by implication, improve output performance in the economy. Most importantly, the increased government spending should be tailored toward viable sectors with close monitoring to avoid diversion of resources through corruption. Efforts should also be made to attract foreign companies to invest in the economy.