Definition
For the economic depression research, the birth of macroeconomics has prompted the birth of macroeconomics. At the 1930s, the Great Depression, John Menard Cairns published a book of "Employment, Interest and Money Ability", which constructs the main theory of Keynesian. Cairns believes that during the economic depression, the total demand for the product may have insufficient phenomena, resulting in high unemployment rates and possible production capacity loss. He believes that the government should increase the government in the public industry, including the implementation of the dilated monetary policy and fiscal policy with the central bank to stabilize the boom cycle. Therefore, a big conclusion of Keynesian is that in some cases, the market itself cannot push output and employment to the extent of full employment. John Hicks' IS-LM model is a classic example of explaining Keynes theory.
Expansion
Over time, the cognition of the boom cycle has gradually enacted and expanded to other fields, most of which is a response to Keynes theory. The new classical syndrome is a synthesis of Keynes economics and neoclassical economics. Although Keynesian is in the short term, neoclassical is more explained in the medium and long term. The emerging classical economics will take out from the Kanes Jingqi cycle theory. The depression of the market is because the incomplete information is caused by incomplete information, including Milton Friedman's constant income and small Robert. Lucas proposed the theory of "rational choices".
Other
compared to the Emerging Cairns school preserved the hypothesis of rational expectations, but blame the boom cycle on the market failure. The emerging Cairns school believes that prices and wages are "viscous", that is, they will not make adjustments with the economic situation. Therefore, the neoclassical school believes that the price and salary will automatically adjust to achieve full employment, and the emerging Kanes school believes that full employment will only be automatically reached in a long time, and there is also a government and central bank intervention in the short term.
On the other hand, the Austrian economics to the Cairns school is considered that the boom cycle is due to the release of excessive lending funds through the central bank, resulting in excessive capital lending, thus causing entrepreneurs Error Investment and Capital Error Allocation, thus forming a credit foam. They believe that the expansion period in the boom cycle is the abuse period of capital, and the immediate recession is the beginning of economic recovery. The theory of the Austrian School is not valued by the Cairns school or the neoclassical school, but there is still some supporters in the academic circles.