The Impact of Keynesianism on Macroeconomic Policies of a State Essay

The Impact of Keynesianism on Macroeconomic Policies of a State - Essay Example This paper offers comprehensive review of the successful applications of Keynesianism concepts in the macroeconomic policies of different countries. Also fundamental changes in the macroeconomic methodology, introduced by Keynes is under consideration It is clear that to try and characterize a Keynesian policy regime is very difficult. Most authors concur in seeing the policies pursued in early postwar Britain as deserving that name, with however much qualification. Perhaps the best term is simple or hydraulic Keynesianism Simple Keynesianism is a term employed by Alan Booth to describe how the very broad agenda of 1930s Keynesianism was narrowed, by going through the Whitehall machine in the later years of the war, so that by the late 1940s the Keynesian program focused primarily on the simple manipulation of aggregate demand. This program did not have much impact on policy in the early postwar years because of the government's emphasis on controls and planning, but after 1947 it became more important as fiscal policy displaced physical controls. In broader perspective, the impact of this regime in creating the concurrent period of full employment has been much debated. An early postwar generation tended to see a direct line from Keynesian theory to Keynesian policy to full employment. A one-sentence summary of the existing literature on the Keynesian revolution in economic policy with regard to Britain in the 1951-64 period would suggest that "much ado about nothing" would be a considerable exaggeration; but the positive benefits to the economy of this regime have to be set clearly in the context of international boom that characterized this period, a boom in which countries with variant policy regimes participated.