Macroeconomics Analysis of Keynesian economics Economics Paper (Reaction Paper Sample)

Macroeconomics Analysis of Keynesian economics
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Macroeconomics Analysis of Keynesian economics
It is a theory that explains expenditure output, employment, and inflation and was developed by John Keynes on macroeconomics development. The different interpretations of Keynes' thoughts led to disputes between Keynesian economics and post-Keynesian economic theory and the fierce criticism of Keynesian economics by Friedman and Lucas, which caused conflict with Keynesian economics. Monetarism and the school of rational expectations go hand in hand. Lucas, Sargent, Kidland, and Prescott built the micro-foundation of macroeconomics, thereby reintroducing the neoclassical paradigm into macroeconomics and forming a representative of neoclassical macroeconomics. Neoclassical macroeconomics is very important to macroeconomics as it explains major factors that effect the economy.
Lucas introduced the hypothesis on rational expectations in Macroeconomics, it has explained a bridge that connect with the neoclassical paradigm, thus embarking on the path of neoclassical evolution. The rational expectations school of thought seems to seek macroeconomics' micro-foundations; it seeks to understand the neoclassical paradigm's core objective. The major problem is that the dynamic general equilibrium model cannot deal with uncertainty, and the key assumption of uncertainty is inseparable from macroeconomics facts. The post-Keynesian criticism of Keynesian economics started from uncertainty. Keynesian economics puts uncertainty in a key position, but Keynesian economics discarded this key component. The traditional school of rational expectations also failed to deal with this problem well. It was not until Kidland and Prescott added the idea of equilibrium model and constructed a modern dynamic random general equilibrium model for the first time that made Keynes' uncertainty hypothesis.