Keynesian economics

Syllable breakdown

Dictionary meaning

the school of macroeconomic thought deriving from the work of British economist John Maynard Keynes, particularly his 1936 General Theory of Employment, Interest and Money, which argued that aggregate demand is the primary driver of economic output and employment in the short run, that markets do not automatically clear at full employment, and that government fiscal policy — spending and taxation — can and should be used to stabilise the economy during recessions by boosting demand; Keynesian economics challenged the classical view that market economies self-correct rapidly and provided the theoretical foundation for the mixed economy welfare states built in the postwar Western world; it was displaced in mainstream economics by monetarism and new classical macroeconomics in the 1970s and 1980s, but experienced significant revival following the 2008 financial crisis and the COVID-19 pandemic, when fiscal stimulus was widely deployed by governments across the political spectrum