John Maynard Keynes's Contributions To Term Paper

Length: 8 pages Sources: 12 Subject: Economics Type: Term Paper Paper: #17898336 Related Topics: Politicians, Keynesian Theory, Central Bank, Macroeconomics
Excerpt from Term Paper :

A b) Consider the articles on behavioral economics at Summarizethe main thrust of some of these articles. Based on these articles, what's your opinion of behavioral economics? Do you think behavioral economics represents a return to Veblen's ideas?

In many respects it can be agreed that behavioral economics has much in common with Veblen's theories. Behavioral economists agree with Veblen that in most cases humans act illogically, because they are driven by instincts rather than by pure reason.

Thorstein Veblen stated that economic processes are mainly affected by evolution, social relations, political situation and other factors which are more global than circulation of money and accumulation of wealth. His ideas of social relations domination in economics have much in common with ideas of behavioral economists, who state that economy is much affected by psychological factor, or behavior of social groups.

It's proved by a number of applied researches held today. For example people who got data about utility bills of their neighbors become more economic, saving electricity and water. In many respects after people are provided information about economies of their neighbors, they plan budget in different way, trying to save more. it's explained by psychology of people, by their desire "not be worse than others," as in many respects income of them and their neighbors are alike. Also findings of behavioral psychologists allowed better exploration of market relations and factors which influence demand and changing character of stock market.

4. (a) to what extent has economics benefited from the application of mathematical methods in the analysis of economic issues? (Hint: See chapter 11 of the ordinary business of life by Roger Backhouse.)

Use of mathematical methods in economics allows solving a number of complicated and problems. Mathematics is widely used in such fields of finance as planning, decision making, forecasting and risk evaluation. It can be said that mathematics is the main tool of economics as it allows presenting data and making certain kind of conclusion from any economic situation. In a general scope economics knowledge can not be applied to any business related issue without application of mathematics.

Mathematical methods of decision making and game...


Such methods are used by government agencies in order to create balanced budgets, reduce risks of inflation, prices growth, unemployment, etc.

Methods of economical planning are widely used for forecasting of future sales on the base of data collected from the past. Methods of planning which use applied linear programming allow building economical models which can predict future behavior of prices, efficiency of industrial production, etc.

Among the most important mathematics application to economics is application of statistical methods, which play fundamental role in economics, as they allow organizing economic data for its future utilization.

We can state that without using mathematical methods for solving economic issues, we would base our solutions on pure intuition and guesses rather than on rational and logical observations.

A b) Comment on Paul Krugman's article "Two Cheers for Formalism" which is available at his web page

Paul Krugman writes about modern perception of formalism in economics in his article "Two Cheers for Formalism." Formalism is often criticized for building economics on pure mathematics. The major critics comes from non-economists mainly politicians and journalists, yet some economists also question the need of formalization.

The main problem is that those who attack formalism in economics don't have any fundamental economics knowledge and don't understand mathematics of economics correctly, also because of lack of knowledge. Lack of understanding of economics concepts and math, which supports those concepts, leads to criticism over modern economic policies and economic theories which justify them. It mainly refers to globalization, which created a lot of protests both inside of the U.S.A. And in developing countries. Krugman perfectly well explains the meaning of equation that sum of a nation's capital account and current account is zero and how this equation explains bankruptcy of anti-globalization theory that relocation of production into developing countries leads to unemployment and weakening economy of developed countries, while it also changes little in the developing countries. Krugman makes it clear that a lot of people hate economists, because in majority those people are prisoners of their own illusions about "correct economy" and "right economic policies," which in reality are nothing by populist products of public opinion manipulations.

Krugman makes it clear that true economists use mathematics for checking relevancy of their own ideas, as a method to find true solution in required cases. Krugman states that inability of economists to write articles in popular science language, which would be understandable for non-economists creates main obstacle for understanding economics today.


Backhouse, Roger the ordinary business of life

Krugman, Paul Two cheers for Formalism available at

Whalen, Charles J. Putting a Human Face on Economics Business week online 2001 available at

Diop, Julie Explaining the Irrational Technology Review, November 2002

The Economist Behaviourists at the gates, 2003 available at

Dugger, William M. Veblen's Radical Theory of Social Evolution Journal of Economic Issues

Knoedler, Janet T. Veblen and Technical Efficiency Journal of Economic Issues

Hodgson, Geoffrey M. The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism Routledge, 2004

Kasper, Sherryl the Revival of Laissez-Faire in American Macroeconomic Theory: A Case Study of Its Pioneers Cheltenham, 2002

Skidelsky, Robert John Maynard Keynes: The Economist as Saviour 1920-1937, Papermac, 1994

Yergin, Daniel the Commanding Heights: The Battle for the World Economy Simon & Schuster, 1998

Beaudreau, Bernard C. The Economic Consequences of Mr. Keynes: How the Second Industrial Revolution iUniverse, 2006

History of Economic Thought

Sources Used in Documents:


Backhouse, Roger the ordinary business of life

Krugman, Paul Two cheers for Formalism available at

Whalen, Charles J. Putting a Human Face on Economics Business week online 2001 available at

Diop, Julie Explaining the Irrational Technology Review, November 2002

Cite this Document:

"John Maynard Keynes's Contributions To" (2008, April 25) Retrieved October 24, 2021, from

"John Maynard Keynes's Contributions To" 25 April 2008. Web.24 October. 2021. <>

"John Maynard Keynes's Contributions To", 25 April 2008, Accessed.24 October. 2021,

Related Documents
Karl Marx and John Maynard
Words: 2458 Length: 7 Pages Topic: Economics Paper #: 52585015

Both of them also realized the necessity of fighting poverty and economic want and did not believe that the mythical 'invisible hand' of the free market economy would do so on its own. They were also common critics of at least some of the aspects of 'Classical Economics' such as the Say's Law. There, perhaps, the similarity between the two ends. Being a conscious opponent of Trotskyism, Keynes was by

Keynes and the Liquidity Trap
Words: 2627 Length: 8 Pages Topic: Economics Paper #: 39071283

Critically for the long-term economic situation, it meant many Japanese firms were lumbered with massive debts, affecting their ability for capital investment. It also meant credit became very difficult to obtain, due to the beleaguered situation of the banks; even now the official interest rate is at 0% and have been for several years, and despite this credit is still difficult to obtain Overall, this has led to the phenomenon

Use One of Irving Fisher Milton Friedman Friedrich a Hayek John M....
Words: 2883 Length: 6 Pages Topic: Economics Paper #: 48785119

Milton Friedman: Journey From Past to Present Milton Friedman, the world's famous economist was born in 1912, in a poor Jewish Immigrant family who shifted to Brooklyn in the late 1980s. After completing his public school studies, he joined Rutgers University in 1928 (Friedman and Friedman 1998, p.25-27). During his early study in the field of economics, he was continuously in contact with the theorists like Mitchell, Burns and Kuznets; therefore he

Slavery Among Women and Children
Words: 2646 Length: 8 Pages Topic: Economics Paper #: 18732287

Globalization and Social/Human Injustices Human slavery/sex trafficking The menace of slavery and trafficking for purpose of sexual exploitation is a menace that greatly neglected or not talked about by the high and mighty yet it is a problem that ravages families on a daily basis. Across the globe, there are people who benefit from the modern day slavery and there are countries that act as source, most of them being the underdeveloped

Sociological Theory
Words: 3338 Length: 11 Pages Topic: Sociology Paper #: 14590401

Sociological Theory Sociology as a field of study entails examining and understanding the behavior of human groups and associated social behavior. In understanding these aspects, the sociologists have, their focus primarily concentrated on the human interactions. These human interactions revolve around how the different social relations influence the behavior and attitudes of the people and how the societies originate, form and change. Human interactions are vast, and so is the field

Economics Finance MBA Level
Words: 13568 Length: 50 Pages Topic: Economics Paper #: 39727750

Disrupting America's economic system is a fundamental objective of terrorists Even as the world continues to struggle with the terrible shock from the September 11 attacks in New York and Washington, one principle lesson has already become clear: disrupting our economic system is a fundamental objective of terrorists. Prior to September 11, our economic environment was certainly not immune to terror, in comparison to many other nations; we lived relatively terror-free. Now,