ABSTRACT
This book starts from a simple observation, namely that Keynesian economics, broadly defined as the theoretical approach that seeks inspiration in Keynes’s writings, has made important contributions to the economics discipline, and it remains a driving force in the development of new theories and methods of analysis. For instance, in his Nobel Prize lecture in December 2001, George Akerlof explained that the research programme for which he received the prestigious prize was nothing but the development of behavioural macroeconomics in the original spirit of Keynes’s General Theory (1936) (Akerlof 2002: 411). He also referred to the diminished authority of Keynesian economics from the late-1960s and 1970s together with the resurgence of Classical economics as a significant development in the history of the economics discipline. For all the progress on the microeconomic foundations of price and wage decisions, New Classical macroeconomics failed to account for real-world phenomena such as involuntary unemployment and rising income inequalities (see also Stiglitz 2002: 489). Akerlof concludes his review of modern theories that explicitly attempt to provide explanations for, and solutions to, these real-world phenomena by stating that Keynes’s work was a major driving force in the development of New Keynesian theories, and more generally the greatest contribution to behavioural economics before the present era. This profound vitality of Keynesian economics is indicative of the significance of Keynes’s insights into the working of modern economies. It confirms the high reference power of economic ideas that have had to face, and consequently be adapted to, a variety of often very different historical circumstances.
