What Would Keynes Have Done?
The fiscal prescriptions of John Maynard Keynes are seeing a bit of a revival these days. New York Times columnist and blog author Gregory Mankiw wrote a piece in the Sunday edition. Here’s an excerpt:
According to Keynes, the root cause of economic downturns is insufficient aggregate demand. When the total demand for goods and services declines, businesses throughout the economy see their sales fall off. Lower sales induce firms to cut back production and to lay off workers. Rising unemployment and declining profits further depress demand, leading to a feedback loop with a very unhappy ending.
This is a good read.
I teach principles of economics courses and a course in the economics of healthcare at Southern Oregon University.
