Keynesians, Monetarists and heterodox economists

Keynesian Economics

A theory developed by John Maynard Keynes that advocates for government intervention through fiscal stimulus during economic downturns to restore confidence and boost demand.

Monetarists

Economists who believe in controlling the money supply to manage economic fluctuations and emphasize the importance of monetary policy over fiscal policy.

Heterodox Economists

Economists who challenge mainstream economic theories and offer alternative perspectives on economic issues.

Recession

A period of economic decline characterized by a decrease in GDP, employment, and investment lasting for an extended period.

Inflation

A sustained increase in the general price level of goods and services in an economy over a period of time.

Animal Spirits

Term coined by Keynes to describe the confidence and willingness of individuals to take risks in economic activities.

Liquidity Trap

A situation where interest rates are very low, and savings are high, leading to ineffective monetary policy as people hoard cash instead of spending or investing.

Fiscal Stimulus

Government policies aimed at increasing spending and investment to stimulate economic growth during a recession.

Washington Consensus

A set of neoliberal economic policies promoted by international financial institutions like the IMF and World Bank, emphasizing free markets, privatization, and deregulation.

Market Failures

Situations where the allocation of goods and services by a free market is not efficient, leading to inefficiencies that may require government intervention.

Agglomeration (clustering) economics

Strategy focusing on growth areas by fostering inter-firm connections between input-suppliers and product producers, leveraging economies of scale, and providing high-quality infrastructure and social services.

Export Processing Zones

Planned areas in China with quality infrastructure and technology aimed at attracting top foreign investors successfully.

State Interventions in Markets

Necessity for government involvement due to market failures such as positive externalities, coordination failures, and asymmetric information, requiring state direction, coordination, and partnership with the private sector.

Heterodox Economists

Economists advocating for addressing market failures and political economy issues to enhance institutions and governance for economic development and higher growth, often aligned with Keynesian economics. Notable figures include Dani Rodrik, Joseph Stiglitz, and Paul Krugman, with the latter two being Nobel Laureates.