Question

Which approach to macroeconomics do you favor and why?

Answer 1

Macroeconomics considers the performance of the economy as a whole, which involves two major approaches to study the pattern and influence on the economy. Economists who believe in either of the types of thoughts are at loggerheads about various aspects about the way the economy influences people and vice-versa..

As far as I am concerned, I favor keynesian approavh more than classical.

Long run is a misleading guide to current affairs. In the long run we are all dead." - John Keynes's famous quote to stop the Classical economists from rapping about the 'long run'.

Keynesian economics is completely based on a simple logic - there is no divine entity, nor some invisible hand, that can tide us over economic difficulties, and we must all do so ourselvesKeynesian economic models stress on the fact that Government intervention is absolutely necessary to ensure growth and economic stability. While classical economists believe that the best monetary policy is no monetary policy, Keynesian economists (Alvin Hansen, R. Frisch, Tinbergen, Paul Samuelson etc.) believe otherwise.In the Keynesian economic model, the government has the very important job of smoothing out the business cycle bumps. They stress on the importance of measures like government spending, tax breaks and hikes, etc., for the best functioning of the economy.

Keynesian economists believe that the macroeconomic economy is more than just an aggregate of markets. Also, these individual commodity and resource markets are not capable of achieving an automatic equilibrium and it is quite possible that such disequilibrium lasts for very long. As full employment is not guaranteed automatically, Keynesian economics advocates the use of beneficial government policies in order to give the economy a helping hand.. Furthermore, it was able to reason for the Great Depression where classical economics failed to do so.

So, due to above stated reasons, I prefer Keynesian more as it sounds more practical in nature. However, view points may vary from individual to individual. All theories have many assumptions that are hard to believe on, but they should rather be seen as a framework for undersatnding the deeper aspects.