Keynes Macroeconomic Theory Essay - 1181 Words

How did Keyness idea of the reasons for the macro-economic instability challenge the prevailing economic orthodoxy? After 100 years of the industrialization era modern economics began to see a change and shift of ideas. These ideas were brought to the front by John Maynard Keynes, who in 1936 transformed much of the modern economics by a single book The General Theory of Employment, Interest and Money. Keynes also wrote other titles as well as ‘A Tract on Monetary Reform (1923) which was an attempt to secure a monetary policy instead of the gold standard. Keynes (2002) believed that the stable economy of Britain was more desirable than the stable value of the pound on the foreign exchange. He argued against going back to the gold†¦show more content†¦Keynes also suggested that to keep both in balance a managed monetary system should be introduced. Keynes published this book during the Wall Street crash and yet again Keyness idea was not paid much attention to as economists as well as government officials were not aware of how serious the depression was going to be. Then Keynes wrote his book ‘The General Theory of Employment, Interest, and money but the ideas in this book were inspired by the work of other economists. Michael Tugan-Baranowskys development was later an important part of Keyness analysis. He said that the imbalance between savings and investments were at the heart of the business cycle. He said that the imbalance could not be overcome by changes in the interest rates, as he argued that there were reasons than the interest rate that motivated people to save. An even more important breakthrough was made by a Swedish economist. Knut Wicksell was the Swedish economist, and it was based on his ideas that Keynes developed the theory of national income which led to the Keynesian revolution. Says Law suggested that any money saved will eventually get invested, and if there was some imbalance in savings and investment it would be fixed by a rise or fall in interest rate. However,Show MoreRelatedJohn Maynard Keynes Contribution to the Theories of Macroeconomics805 Words   |  3 PagesMacro Questions Part I Describe John Maynard Keynes contribution to the theories of Macroeconomics. Why was he such an important economist? Discuss the theories of two other 20th century economists who made a significant contribution to the study of economics. John Maynard Keynes is one of the founding fathers of the modern economic thought. 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