The Economists’ View On Keynesian Economic Changes Over Time
Milton Friedman was a Keynesian theory supporter during the year 1941-1943. His mind changed as he thinks that Keynesian point of view ignored the impact of money supply. Milton Friedman wrote a few of article. For example, “Quantity Theory of Money” and “The role of monetary policy. The ideas that he wants to deliver in these articles are the control of money supply can control the inflation of a country. Besides, his articles also explain the breakdown of the Phillips Curve in the1970s, which distinguish from Keynesian theory. As a conclusion, Milton Friedman disagree with Keynesian Theory. Robert Emerson Lucas, Jr also opposes with Keynesian economics. He disagreed with Keynesian Theory because of two reasons. First, on his point of view, full employment will not happen, second, the role of market mechanisms and public reaction had been ignored in Keynesian economic theory. Keynes was too focus on government intervention in the economy. Besides, he pointed out that Keynes’s view of economic has ignored the individual decision.
According to Lucas, Robert (1976). “Econometric Policy Evaluation: A Critiques”. He said that any changes in policy will bring a negative result by changing the structure of the econometric models and problems will occur when private agent behaviour depends on government policy rules. Paul Marlor Sweezy has a different view of economic with Keynes. In his point of view, Keynes theory can’t help to understand the social trend and the major incident happen in 20th century but Marxism can. In year 1938 June, he explains the role of expectations in the determination of supply and demand and the problem of economic stagnation in journal The Review of Economic studies and imperfect competition.
Paul Robin Krugmanis agreeing with Keynes’s economic view. This is because Paul Robin thinks that how to increase demands was one of the vital issues of economic nowadays which is one view of Keynes. He did an in-depth research about the Mexican crisis and the 2008 global financial crisis. In the research, the key question is how to create a sufficient demand. Thus, he came out with his new trade theory. He explained why countries continue to produce things that they did not have a comparative advantage to produce in this theory.
Is Keynesian economics dead today?
The answer is no. Keynesian is the greatest thing that's ever happened in the history of mankind. John Maynard Keynes was one of the most influential thinkers in modern times. His ideas and theories have influenced the lives of many countries. Even until 00’s, Keynesian economics is being taught as part of the Macroeconomics subject and is debated around the world when countries execute approach likes fiscal policy and monetary policy. In August 2016, Japan economic stimulus package was announced by their government. The Prime Minister and the cabinet proclaim the economic stimulus package total of YEN 13. 5 trillion to achieve sustainable economic growth including of providing for the low-salary workers, framework spending, and national and local governments spending.
In 2017, Japan Gross domestic product (GDP) have increase by 1. 7% since last year due to the right government spending to low-salary workers, and framework spending (Japan GDP - Gross Domestic Product 2017, 2017). In November 2008, Malaysia economic stimulus package was reported by the Barisan Nasional which is the current serving government. The Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak state the economic stimulus package will be MYR 7 billion to sustain economic development, strengthen Malaysian economy, and to strengthen the ability of recovering the economic recession gap. Budget deficit for 2009 has been estimated at 4. 8 percent of gross domestic product (GDP), and growth rate has decline to 3. 5 percent as compared last year 2007 which is 5. 3 percent. These economy stimulus packages have included housing benefits, entrepreneurial credit facilities, and reduction in compulsory deposit options.
In June 5 2017, South Korea economic stimulus package had announced by the new government lead by Moon Jae-In. He stated that the economic stimulus package will be 11. 2 trillion won. 48% from the package will use it to create new public and private sector jobs to reduce the rate of unemployment rates. Another 20% will be used for medical care purpose. The gross domestic product (GDP) have increased by 1. 6% compared to 2017 GDP.