Welcome to the YSI Keynesian Economics Working Group!

The YSI Keynesian Economics Working Group (KEWG) aims to create a fruitful environment for insightful discussions covering various topics on Keynesian economics.

In contrast with the traditional economic thinking, which stresses the supply-side as the engine of economic growth, the Keynesian approach rests on the principle of effective demand. According to this view, in capitalist economies, output and employment growth are constrained by aggregate demand. Because capital is producible (and its production is induced by demand growth), the supply of factors is not the main constraint for economic growth – even in the long-run. The lack of demand, on the other hand, may reduce the incentives for capitalists to invest and, hence, de-stimulate the production of new capital. Thereby, Keynesian economics is mainly focused on the demand aspects of the economy and on the capacity of supply factors to react to demand stimulus.

Since the financial crisis of 2007/8, the world economy as a whole is facing a long-lasting recession period. The traditional economic thinking has been struggling to understand the consequences of this process to countries’ long-term growth, as well as to purpose effective solutions. Keynesian scholars, however, have been working on issues such as economic contraction, inequality, unemployment and financial instability for a long time and have been developing a set of analytical tools and policy recommendations that may help to alleviate the sorry plight of the people by reconciling economic growth with fair income distribution.