P3: Impact of Keynes

This 1000 word article is the third in a series of posts on Re-Reading Keynes. It traces the impact of Keynesian theories on the 20th century, as necessary background knowledge for a contextual and historically situated study of Keynes. It was published in Express Tribune on 4 Nov 2016. The Global Financial Crisis (GFC) has… Read More P3: Impact of Keynes

Monetary Paradoxes of Baby-Sitting Cooperatives

The Global Financial Crisis of 2007 has led to a renewed interest in Keynesian theories. In particular, Krugman in “The Return of Depression Economics” argued that Keynesian ideas remain relevant to understanding contemporary recessions. To motivate this, he has used a real world example of the Capitol Hill Baby-Sitting Cooperative (BSC). According to an analysis by… Read More Monetary Paradoxes of Baby-Sitting Cooperatives

Why does Aggregate Demand Collapse?

The Great Depression of 1929, and now the Great Recession following the Global Financial Crisis, poses several puzzles for economists. One is them is the sudden and severe drop in aggregate demand. This leads firms to curtail production, and therefore reduces demand for factors of production, most importantly labor. Why does aggregate demand fall, and… Read More Why does Aggregate Demand Collapse?

Financial crises: conventions, speculation and instability

The  recent  American financial crisis is an example of how the financial institutions encouraged speculation dependent on future housing prices, the future price of securitized assets and the renewal of lending operations. This behaviour was sustainable until housing prices began dropping and the previous risky lending led to a great number of foreclosures. As housing… Read More Financial crises: conventions, speculation and instability