Definition

Noun: * An economic theory and policy approach: Keynesianism is a macroeconomic theory based on the ideas of the 20th-century economist John Maynard Keynes. It argues that aggregate demand (total spending in the economy) is the primary driver of economic output and employment. A core tenet is that during recessions, private sector demand is often insufficient, so active government intervention through fiscal policy (e.g., spending and taxation) and monetary policy is necessary to stabilize the economy, reduce unemployment, and moderate business cycles.

Usage Examples

• Noun:
  • The government's response to the crisis was heavily influenced by Keynesianism, leading to a large stimulus package.
  • Many economists debated the relevance of Keynesianism in a globalized economy.
  • The policy of running a budget deficit during a downturn is a classic principle of Keynesianism.

Advanced Usage

• "New Keynesianism": A school of thought that incorporates Keynesian ideas into modern macroeconomic theory, often using microeconomic foundations (like price stickiness) to explain why markets may not clear quickly.
  • New Keynesianism provides more rigorous models to support traditional Keynesian policy conclusions.

Variants and Related Words

• Keynesian (adjective): Relating to the theories of John Maynard Keynes.
  • A Keynesian economist; a Keynesian policy approach.
• Keynesian (noun): A person who supports or believes in Keynesian economic theories.
  • He is a staunch Keynesian who advocates for government stimulus.

Synonyms

• Demand-side economics: An economic theory that emphasizes the role of aggregate demand in driving economic growth and stability.
• Fiscal activism: The policy of using government spending and taxation actively to manage the economy.

Antonyms / Contrasting Theories

• Monetarism: An economic theory emphasizing the role of governments in controlling the money supply, associated with Milton Friedman, and generally skeptical of active fiscal policy.
• Austrian School: A school of economic thought that emphasizes spontaneous order, the price system, and is highly critical of government intervention in the economy.
• Supply-side economics: A theory arguing that economic growth is most effectively driven by lowering barriers for producers (supply), such as taxes and regulation.

Noun

1. the economic theories of John Maynard Keynes who advocated government monetary and fiscal programs intended to stimulate business activity and increase employment