Keynesian Theory
Keynesian economists would suggest that, during a recession, the government should use stimulus efforts to help support the economy during that recession. Later, after the recession, Keynesian theory would suggest reducing government spending during a productive economy. Austerity measures, during a recession, operate on the opposite perspective from Keynesian theory in that Austerity promotes the reduction of government spending, and government deficits, in economic downturns.
- Read the article "Austerity leads to austerity!" and
- Watch the video, "Risk on, austerity wins in Greece".
Explain which perspective, Keynesian or Austerity, is better policy for government during a recession.
Here is the video link https://www.youtube.com/watch?v=SyE_J5Ei1dY
Here is the link to the article https://www.forbes.com/sites/johntharvey/2013/05/01/austerity-leads-to-austerity/#2715e4857a0b6bfcdaf922d3