Showing posts with the label Keynesian economic theory

Spurring Economic Development through Exportation of Value-Laden Efficiencies

The authors Ha and Swales (2012) attempt to determine the single-region IO analysis of a stylized export-base model. They found that improvements in value-added efficiencies also improve upon the GNP of countries and the labor market. There were also regional improvements in exportation which helped to sustain growth. Exports are the underpinning of strong economic activity. The export-base model is a simplified version of the Keynesian demand-driven approach whereby exports and regional productivity are linked. As market demand increases so does the need to produce more products for export. This in turn can increase economic activity to meet market demands. Generally, when policy makers want to increase exports in the export-based model they introduce and spend money on the port and other export functionality. It is hoped that by reducing the costs through investments that it will make exportation cheaper and encourage more use of the facilities. This has a positive eff

Keynesian Theory: Benefits and Detractors

Keynesian economic theory has been under increased scrutiny as the U.S. national debt load increases and the economy suffers from a long period of recession. The theoretical standpoint of the Keynesian model is one of a mixed bag where those elements that would have a positive impact are often drowned out by inefficient governmental waste, political favoritism, and the cost of servicing the debt. Under certain circumstances the policies can help stave off economic collapse but fail to bring about positive benefits the longer it is used. According to the U.S. Census Bureau an era between 1790's to 1930's only saw deficits in government spending in approximately 38 years. Most of this debt was short-term and a direct result of increased costs of war or economic downturns (Lee, 2012). Total federal budgets ran at approximately 3.2% of GNP when compared to nearly 70% of GNP today (The 2012 Long-Term, 2012). At such a high debt-to-earnings scenario the Keynesian approach loses its