History of Economic Thought. Research methodology of J. Keynes (most important)

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History of Economic Thought. Research methodology of J. Keynes (most important)

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71. RESEARCH METHODOLOGY J. KEYNS

Innovation of the economic doctrine of J. Keynes methodologically, it was revealed:

1) in preference for macroeconomic analysis microeconomic approach, which made him the founder of macroeconomics as an independent branch of economic theory;

2) in justification concepts about the so-called effective demand.

J. Keynes set the task of achieving economic proportions between national income, savings, investment and aggregate demand. The starting point is the conviction that the dynamics of the production of national income and the level of employment are determined by the factors of demand that ensure the realization of these resources.

In Keynesian theory, the sum of consumer spending and investment was called effective demand. The level of employment and national income, according to Keynes, is determined dynamics of effective demand. A reduction in wages will not lead to an increase in employment, but to a redistribution of income in favor of entrepreneurs. When real wages decrease, the employed do not quit their jobs, and the unemployed do not reduce the supply of labor, therefore, wages depend on the demand for labor. An excess of labor supply over demand gives rise to involuntary unemployment. Full employment occurs when the level of consumption and the level of investment are in some correspondence. By pushing part of the economically active population into the ranks of the unemployed, balance is achieved in the economic system. In Keynes's theory, it is possible to achieve equilibrium even with part-time employment.

J. Keynes pushed new category - "investment multiplier". Mechanism of "investment multiplier" next: investment in any industry causes an expansion of production and employment in that industry. As a result, there is an additional expansion of demand for consumer goods, which causes an expansion of their production in the respective industries. The latter will present an additional demand for the means of production, etc.

Through investment, there is an increase in aggregate demand, employment and income. The state must influence the economy if the volume of aggregate demand is insufficient. As tools of state regulation Keynes singled out monetary and budgetary policy.

Monetary Policy affects the increase in demand through lowering the interest rate, while facilitating the investment process. The impact of fiscal policy is clear.

J. Keynes developed principles of organization of the international financial system, which served as the basis for the creation of the International Monetary Fund.

The ideas are: the creation of a clearing union between states, which, according to Keynes, must ensure that money received from the sale of goods of one country can be used to purchase goods in any other country; Creation international quasi-currency - opening accounts for all central banks of the allied countries to cover their external deficit; the value of the quasi-currency depends on the size of the country's quota in foreign trade.

Author: Tatarnikov E.A.

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