The Great Depression and countercyclical fiscal policy in Keynesian theory
Name: THIAGO SALLES DA SILVEIRA
Publication date: 05/06/2017
Advisor:
Name |
Role |
|---|---|
| ROGÉRIO ARTHMAR | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| ALEXANDRE OTTONI TEATINI SALLES | Internal Examiner * |
| ROGÉRIO ARTHMAR | Advisor * |
Summary: The present research aims to examine the fiscal policy through investment and social spending as a countercyclical instrument of regulation of aggregate demand in order to maintain an economy in the level of activity near full employment. For that, the economic scenario of the Great Depression and its main interpretations are presented. An analysis of this period of recess is pertinent, for that was the scenario of high unemployment, fall of production and price deflation WHEREin John Maynard Keynes developed in 1936 his main work, The General Theory of Employment, Interest and Money, henceforth General Theory, presenting the principle of effective demand in opposition to the theoretical framework of the orthodox economy, that is, Say's Law. Keynes proposes that as cyclical fluctuations occur due to a lack in effective demand caused by a fall in the marginal efficiency of capital and, thus, legitimizes the State intervention in the economy through an active fiscal policy, aided by the multiplier, to stabilize the levels of income and employment.
