Was Keynesian Economics Ever Dead? If So, Has It Been Resurrected?

Abstract

This article reflects on rising interest in Keynesian macroeconomics in the aftermath of the Great Recession. I identify aspects of Keynesian thinking that never were completely banished from the mainstream as well as threads of Keynesian macroeconomics that have become more influential since the crisis. However, the way most mainstream analysis continues to invoke the zero lower bound for short-term interest rates and the concept of the ‘natural’ rate of interest implies that any Keynesian resurrection outside of heterodoxy remains incomplete. The future may bring broader recognition of how demand leads economic growth and of ways in which the demand side leads the supply side beyond the typical textbook ‘short run.’