• 사회경제평론
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• v.31 no.1
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• pp.63-105
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• 2018

Keynes proposed revolutionary claims in his General Theory that the capitalist economy have the following characteristics: unemployment is general, unemployment could not be automatically restored, business cycle and crisis are inherent in the capitalist economy. Hicks refuted Keynes that unemployment is a special case of depression, and Modigliani argued that it is only valid under a particular assumption of wage rigidity. Also, Pigou and Patinkin contended that unemployment can be automatically recovered in the flexible wages and prices system. These refutations have made the revolutionary reforms appeared in Keynes's General Theory to decline. However, their claims did not correctly interpret Keynes's theories, nor effectively refute them. They interpreted Keynes narrowly within the framework of the classical tradition and refuted Keynes using the claims of the classics. The revolutionary nature of Keynes's General Theory could be not undermined by their refutation, but rather may be more useful in analyzing today's economic reality.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.10
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• pp.39-48
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• 2022

This research aims to investigate the application of Keynes's theory in Indonesia, particularly in solving unemployment and poverty problems through government spending, economic growth, and human resource capacity. The basic concepts of the Keynesian theory were used as a method, through which government spending was harnessed toward economic growth in reducing unemployment and poverty rate. The analytical materials used were panel data for the 2017-2021 period in Central Java, Indonesia. The analytical methodology used was a multiple regression experimental design in selecting the best model according to Keynes's theory, especially for overcoming formidable problems. The main results showed that large Government spending program is ineffective in encouraging pro-growth, pro-job, pro-poor, and pro-equity development policy strategies. The causes of this failure include the violation of Keynes' assumptions about rationality and the low quality of education investment, which do not encourage productive and innovative entrepreneurship, as well as self-employment opportunities. As a result, government spending, including subsidies and direct financial assistance, used to implement the macroeconomic monetary, unstructured, and fiscal policy system is insufficient to significantly reduce the enormous difficulties. The main research results confirm that human capital capacity is the key to mitigating and reducing unemployment and poverty.

• 사회경제평론
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• no.38
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• pp.199-240
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• 2012

According to the Post Keynesian endogenous money theory, money is created by the bank deposit which is dependent on the banks' supply of loan. And the demand for loans is dependent on investment by firms. In the money creating process, real value(or investment) and money are connected with banks' credit. In this paper, we investigated Keynes and Post Keynesian endogenous money theory with critical reviews of Hwang (2005). We came to three conclusions. First, Post Keynesian endogenous money theory is based on Keynes' theory. Second, Keynes' endogeneity of money is essentially different from that of Wicksellian. Third, focusing on the differences of the starting point of the arguments not on the conclusions, two Post Keynesian views, namely horizontalists and structuralists are compatible with liquidity preference theory in the Keynes' system.

• East Asian Economic Review
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• v.17 no.2
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• pp.161-206
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• 2013

Since the global financial crisis in 2008, the world economy has been suffering from the Great Recession characterized by high and persistent unemployment as well as drastic fall in asset prices. Real business cycle theory or new-Keynesian economics which has been the dominant paradigm in macroeconomics for the last four decades is unable to explain the high and persistent unemployment during the Great Recession. This implies that the economics of Keynes should be taken seriously again as a tool to explain the Great Recession. Farmer (2012) proposes a new way of interpreting the economics of Keynes by providing it with a solid micro-foundation based on labor markets with search. According to Farmer (2012), aggregate economic activity independently depends on the long-term self-fulfilling expectations about the stock prices. As a consequence, the government or the central bank should implement a policy that influences the public's confidence about the stock market. For an open economy like the Korean economy, it is not only stock price but also the price of asset such as house that matters more for the aggregate economic activity. Households in the Korean economy hold more than 70 percent of their wealth in the form of real estate asset, especially housing asset. This makes the public's confidence about the future prices of houses even more important in explaining the business cycles of the Korean economy. Policymakers should implement policies to improve the confidence of households about the housing market to recover from the recession caused by a fall in house prices. Little theoretical work has been done in explaining fluctuations in the aggregate economic activity from the point of house prices. This paper develops a small open economy model with traded and non-traded capital based on Farmer (2012) and shows that the aggregate economic activity also independently depends on the households' self-fulfilling expectations about the future prices of non-traded asset such as houses.

• Journal of Digital Convergence
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• v.1 no.1
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• pp.255-282
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• 2003

This study shows how much the local college influences the local economy using the Keynes Model, which is evaluated as the basic of macro economics. The methods of research are economic measurement and empirical study being used questionnaire study. First of all, the result being used Keynes model shows that the local economy has been grown by the students of "D" university from 1994 to 2002, which is approximately more than 100 billion won a year. The amount is more than 15-30% among the gross income in "S" city. Next, the survey was carried out making the students of "D" university and villagers an object of it, which is especially a comparative study between "D" university and "K" university nearby "S" city. The result is as the follows; the influence of the two universities towards local economy is almost same, but the villagers in "S" city underestimate the valuable. In the result, the shortage of understanding about the importance of local college would cause obstructing not only the potential ability of local college, eventually, but also the development of the region.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.741-750
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• 2021

The budget deficit is closely related to expansionary fiscal policy as a fiscal instrument to encourage economic growth. This study aims to apply optimal control theory in the Keynesian macroeconomic model for the economy, so that optimal growth can be found. Macroeconomic variables include GDP, consumption, investment, exports, imports, and budget deficit as control variables. This study uses secondary data in the form of time series, the time period 1990 to 2018. Performing optimal control will result in optimal fiscal policy. The optimal determination is done through simulation, for the period 2019-2023. The discrete optimal control problem is to minimize the objective function in the form of a quadratic function against the deviation of the state variable and control variable from the target value and the optimal value. Meanwhile, the constraint is Keynes' macroeconomic model. The results showed that the optimal value of macroeconomic variables has a deviation from the target values consisting of: consumption, investment, exports, imports, GDP, and budget deficit. The largest deviation from the average during the simulation occurs in GDP, followed by investment, exports, and the budget deficit. Meanwhile, the lowest average deviation is found in imports.

• Journal of Applied Tourism Food and Beverage Management and Research
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• v.8
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• pp.89-121
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• 1997

Many of the measures and policies advocated by supply-siders, such as lower taxation, less government intervention, more freedom from restrictive legislation and regulation, and the need for increased productivity can be found in writing the classical economist. Nor is supply-side economics a complete divorcement from Keynesian analysis. In both camps the objectives are the same-high level employment, stable prices and healthy economic growth, the means or suggestions for attaining the objectives, however, differ. Consequently, recommended economic policies and measures are different. keynesians rely primarily on the manipulation of effective demand to increase output and employment and to combat inflation. They assume ample resources to be available in order that supply will respond to demand. The supply-siders emphasize the need to increase savings, investment, productivity and output as a means of increasing income. Supply-siders assume that the increase in income will lead to an increase in effective demand. Keynesians suggest that savings, particularly those not invested, dampen economic activity. Supply-siders hold that savings, or at least an increase in after-tax income, stimulates work effort and provides funds for investment. Perhaps keynesians are guilty of assuming that most savings are not going to be invested, whereas supply-siders may erroneously assume that almost all savings will flow into investment and/ or stimulate work effort. In reality, a middle ground is possible. The supply-siders stress the need to increase supply, but Keynes did not preclude the possibility of increasing economic activity by working through the supply side. According to Keynes' aggregate demand-aggregate supply framework, a decrease in supply will increase output and employment. It must be remembered, however, that Keynes' aggregate supply is really a price. Lowering the price or cost of supply would there by result in higher profit and/ or higher output. This coincides with the viewpoint of supply-siders who want to lower the cost of production via various means for the purpose of increasing supply. Then, too, some of the means, such as tax cuts, tax credits and accelerated depreciation, recommended by suply-siders to increase productivity and output would be favored by Keynesians also as a means of increasing investment, curbing costs, and increasing effective demand. In fact, these very measures were used in the early 1960s in the United State during the years when nagging unemployment was plaguing the economy. Keynesians disagree with the supply-siders' proposals to reduce transfer payments and slow down the process of income redistribution, except in full employment inflationary periods. Keynesians likewise disagree with tax measures that favored business as opposed to individuals and the notion of shifting the base of personal taxation away from income and toward spending. A frequent criticism levied at supply-side economics is that it lacks adequate models and thus far has not been quantified to any great extent. But, it should be remembered that Keynesian economics originally was lacking in models and based on a number of unproved assumptions, such as, the stability of the consumption function with its declining marginal propensity to consume. Just as the economic catastrophe of the great depression of the 1930s paved the way for the application of Keynesian or demand-side policies, perhaps the frustrating and restless conditions of the 1970s and 1980s is an open invitation for the application of supply-side policies. If so, the 1980s and 1990s may prove to be the testing era for the supply-side theories. By the end of 1990s we should have better supply-side models and know much more about the effectiveness of supply-side policies. By that time, also, supply-side thinking may be more crystallized and we will learn whether it is something temporary that will fade away, be widely accepted as the new economics replacing Keynesian demand analysis, or something to be continued but melded or fused with demand management.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.8 no.12
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• pp.65-77
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• 1985

The mainpoints of General Theory is 1) the mainspring of economic activity is effective demand which can expand or control in relation to supply as a result of spontaneous decision by customer or government. 2) change in effective demand Produce change in output and employment in the same direction 3) which given productivity of labour the Vice level depend on the money supply affect the in downward direction 4) change in the money supply affect the economy through the rates of interest 5) the only automatic mechanism through which the economy can adjust itself to a deficiency of effective demand is the long process which unemployment reduces wage rates and consequently the demand for money and interest rates, above summarized contents are General Theory frame-work. The neo-classical macro general equilibrium theory, which has been reconstructed subsequent to Keyneses critism is treated the neo-classical macro-general equilibrium theory which inherits the classical theories of labour market and the aggregate production function, on demand side, it introduce the Keyneses macro-general equilibrium theory, which function through flexible movement of prices, wage and interest. Nowadays, Keynes General Theory is being developed into new dimension i, e. the macro-disequilibrium theory, and adequacy, and appropriateness of the theory and its significant contributions to modern economics are being reinterpreted and substantiated.

• Journal of Distribution Science
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• v.13 no.3
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• pp.69-77
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• 2015

Purpose - The purpose of this study is to examine whether the cash policies of retail firms listed on Korean stock markets are consistent with the evidence provided in the study of Almeida et al. (2004). Liquidity management is an important issue for financially constrained firms relative to financially unconstrained firms. Because there are few sources of external funding, the optimal liquidity policies of financially constrained firms should reflect their own earnings or cash inflows to create opportunities for current and future real investments. According to this simple idea, we estimate the sensitivity of cash to cash flows and simply check whether the estimated sensitivity to cash flows of the cash retained by constrained retail firms is greater than that of the cash retained by unconstrained retail firms. Through this work, we aim to explain why the cash policies of the retail firms listed on the Korean stock markets differ from those of listed manufacturing enterprises. Research design, data, and methodology - To explain a firm's cash holdings, we use only three explanatory variables: earnings before interest and taxes (EBIT), Tobin's q, and size. All the variables are defined as the value of the numerator divided by aggregate assets. Thanks to this definition, it is possible to treat all the sample firms as a single large firm. The sample financial data for this study are collected from the retail enterprises listed on the KOSPI and KOSDAQ markets from 1991 to 2013. We can obtain these data from WISEfn, the financial information company. This study's methodology has its origin in Keynes's simple idea of precautionary liquidity demand: When a firm faces financial constraints, cash savings from earnings or cash inflows become important from the corporate finance perspective. Following this simple idea, Almeida et al. (2004) developed their theoretical model and found empirical evidence that the sensitivity of cash to cash flows varies systematically according to different types of financing frictions. To find more empirical evidence for this idea, we examined the cash flow sensitivity of the cash held by Korean retail firms. Results - Through several robustness tests, we empirically showed that financially constrained Korean retail firms display significant positive propensity to save cash from earnings before interest and taxes, while the estimated cash flow sensitivity of the cash held by unconstrained retail firms is not significant. Despite the relatively low earnings of retail firms, their sensitivity is three times greater than that of manufacturing enterprises. This implies that Korean retail firms have greater intentions of facilitating future investments rather than current investments. Conclusions - The characteristics of the cash policies of Korean retail firms differ from those of manufacturing firms. This contrast may be attributable to industry-oriented policy planning, regulations, and institutional differences. However, the industrial policymakers should observe signals of the long-term growth options of retail firms based on their high propensity to save from their cash inflows.

• 사회경제평론
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• v.29 no.1
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• pp.119-154
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• 2016

Kalecki thought that monetary and financial factors play very important roles in the processes of investment decision and expenditure. He also acknowledged that interest rate is monetary phenomenon and investment finance is provided by banks prior to savings as Keynes did, and suggested that the more is the debt, the greater is the risk of debtor and lender. However, in developing investment theory he dismissed those monetary and financial factors or substituted into actual profit or savings, because he aimed to construct the investment theory to be able to explain the 'automatic mechanism of the fluctuation of capitalist economy'. Thus it is argued that Kalecki did not consider the monetary and financial factors in his investment theory. This paper aims to modify Kalecki's investment theory so that it incorporates the monetary and financial factors, such as the willingness of banking system to lend, interest rates, the ratio of leverage which had been dismissed by him. The Kaleckian investment theory that incorporates the monetary and financial factors in Kalecki's theory of investment allows us to explain not only an automatic and regular business cycle, but also irregular excessive investment and high leverage, consequent risk increase and financial crisis occurred in the economy with developed financial system.