Keynes and the Modern Economy: Analogies, Differences, and Contradictions

Year 2020, Volume: 6 Issue: 2, 141 - 157, 01.10.2020

Onur Özdemir

Abstract

This paper investigates the major tools of the orthodox Keynesian
approach and the critical discussion for that approach based on mainstream
assumptions covering both classical dichotomy and the neoclassical
thoughts. While the study reveals the difference of orthodox Keynesian
arguments from the others in the presence of the importance of uncertainty
and expectations, the counter-arguments are formed by way of examining
three different assumptions: (i) the Lucas critique, (ii) the new Keynesian
approach and the small menu cost theory, and (iii) the heterodox reflections.
Moreover, it briefly explains the core elements of Keynesian investment
theory concerning the components of financial markets. However, both
of these factors also consider some major contradictory factors to reveal
the difference of orthodox Keynesian assumptions from the mainstream
theoretical agenda of the neoclassical approach.

Keywords

Keynesian Economics, Classical Dichotomy, Financial, Financial Markets, Investment Theory, Neoclassical Approach

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