New Macroeconomics

CHAPTER 1

Introduction

When John Maynard Keynes wrote his masterpiece, The General Theory of Employment, Interest and Money, in 1936, macroeconomics was dominated by a belief in laissez-faire, that is, the government should keep its hands off the economy. The subject of macroeconomics is quite old and we can find a discussion of what creates prosperity and a higher living standard in ideas offered as long ago as the third century BC. According to Navin Doshi, an engineer-cum-economist, economics, especially macroeconomics,

has an ancient history. In the West, especially Greece, it was first propounded by the likes of Plato and Aristotle. In India, it was offered by Kautilya.

(Economics and Nature: Essays in Balance, Complementarity and Harmony ...