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Keynes’s General Theory After 75 Years: Chapter 24 and the Character of ‘Keynesian’ Policy

Authors


  • The author is indebted to two anonymous referees for advice.

Tony Aspromourgos, School of Economics, University of Sydney, NSW 2006, Australia. Email: tony.aspromourgos@sydney.edu.au

Abstract

The Great Financial Crisis led to a revival of interest in ‘Keynesian’ economic policy, understood as temporary, debt-financed fiscal activism in response to a short-run, albeit particularly deep, macroeconomic contraction. But Keynes’s theory led him to diagnose involuntary unemployment as a long-run problem, and one for which competition (via wage and price flexibility) was not a solution. Consequently, his policy proposals were more far-reaching than short-run fiscal activism. The final chapter of The General Theory provides the appropriate point of departure for reflecting on the difference between Keynes’s policy position and what later came to be regarded as Keynesian policy.

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