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New Keynesian policy: The revival of each policy maker's dream
Blekinge Tekniska Högskola, Fakulteten för teknikvetenskaper, Institutionen för fysisk planering.
2018 (engelsk)Inngår i: Keynesian Policies - A New Deal in the European Narrative: Employment, Equality and Sustainability, Nova Science Publishers, Inc. , 2018, s. 1-40Kapittel i bok, del av antologi (Annet vitenskapelig)
Abstract [en]

This is a story about two economic paradigms representing two different views on public policy makers' possibility to manage the economy. Keynes' theory represented at radical break with mainstream economics when it put the policy maker in the driver seat in charge of securing full employment by controlling aggregate demand. When the theory was used in practice in the 1950s it seemed to work so well that researchers and policy makers were convinced that the unemployment problem was permanently solved. However, in the beginning of the 1970s something unexpected happened. A radical different economic situation alien to Keynes' theory emerged. A window of opportunity for new ideas was opened which opened for the rebirth of Friedrich Hayek's and the Austrian Economic School thoughts. For members of this school the economy is the sum of the behavior of myriads of actors in a constantly changing context. Due to large complexity public policy makers cannot manage the economy. The role of polic makers is reduced to control the public finance and the monetary supply. This neoliberal paradigm dominated the 1980s and 1990s. The global financial crisis in 2008 opened for a revival of the Keynesian paradigm when policy makers were concerned that the global financial crisis should result in a deep recession. They felt a strong need to try to avoid this by stimulating demand. An expansive fiscal policy was combined with light monetary policy. This policy mix should according to the theory result in lower unemployment and higher inflation. To general surprise, the inflation did not raise making room for an almost boundless fiscal stimulation. It was a Keynesian dream world only shadowed by growing public debt. What will happen when interest rates raises or next recession arrives?. © 2018 Nova Science Publishers, Inc.

sted, utgiver, år, opplag, sider
Nova Science Publishers, Inc. , 2018. s. 1-40
Emneord [en]
Austrian school of economics, Fiscal policy, Innovation policy, Keynesian policy, Kondratieff waves, Stagflation, System of innovation
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URN: urn:nbn:se:bth-17474Scopus ID: 2-s2.0-85058763070ISBN: 9781536140279 (tryckt)ISBN: 9781536140262 (tryckt)OAI: oai:DiVA.org:bth-17474DiVA, id: diva2:1277044
Tilgjengelig fra: 2019-01-09 Laget: 2019-01-09 Sist oppdatert: 2019-01-09bibliografisk kontrollert

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Totalt: 248 treff
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