Note: This is post #113 in a weekly video series on basic economics.
“One point of contention among economists is the causes of business cycles and recessions,” says economist Tyler Cowen. “And if you disagree on the causes, chances are that you disagree on the solutions.”
In this next section from the Marginal Revolution University video series, we’ll look at some of the major business cycle theories—Keynesian, Monetarist, Real Business Cycle, and Austrian—and what their proponents think we ought to do about recessions. In this first video, we look at the Keynesians, a group that tends to favor activist fiscal policy and monetary policy. In other words, they want governments to spend more (think deficits and public works programs) and grow the money supply while lowering interest rates. The idea is that the government is doing everything it can to stimulate aggregate demand.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Click here to see other videos in the Introduction to Economics series.