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(economics) Of or pertaining to an economic theory based on the ideas of John Maynard Keynes, as put forward in his book The General Theory of Employment, Interest and Money , published in 1936 in response to the Great Depression of the 1930s, and extensively extended by a large body of followers before and after his death in 1946.
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With Keynes unable to take much part in theoretical debate after 1937, a process swiftly got under way to reconcile his work with the old system to form neo-Keynesian economics, a mixture of neoclassical economics and Keynesian economics.
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The recession renewed interest in Keynesian economic ideas on how to combat recessionary conditions.
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Keynesian economics provided the theoretical underpinning for economic policies undertaken in response to the crisis by President Barack Obama of the United States, Prime Minister Gordon Brown of the United Kingdom, and other heads of governments.
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The work of Hamilton was coincident intellectually with keynesianism and contemporary crisis of 1929.
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In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.
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Keynes's influence started to wane in the 1970s, partly as a result of the stagflation that plagued the Anglo-American economies during that decade, and partly because of criticism of Keynesian policies by Milton Friedman and other monetarists, who disputed the ability of government to favourably regulate the business cycle with fiscal policy.
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The early stage of the Keynesian Revolution took place in the years following the publication of Keynes' General Theory in 1936.
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The Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy.
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However, the advent of the global financial crisis of 2007–2008 sparked a resurgence in Keynesian thought.
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Monetarism, a modification of Keynesianism that is more compatible with laissez-faire, gained increasing prominence in the capitalist world, especially under the leadership of Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom in the 1980s.
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