Keynesian economic policies and global financial crisis

This study was conducted to examine three important global financial crises in the twentieth century within the framework of Keynesian economic policies. After the Great Depression in 1929, Keynesian policies were used in the policies put forward to eliminate the traces of the depression. In this period, Keynes put forward his analysis for inflation and unemployment to get rid of the crisis. According to Keynes, in order to stabilize the economy, it is necessary to increase the level of employment and national income without any change in the general level of prices. More investment will increase total demand, which will result in increased production by increasing demand for labor. With increasing demand, income will increase and labor will be directed towards consumption, thus increasing the production level. Increased production means new tax revenue for the state. Keynes' process is called the "multiplier effect" Keynes stated that the multiplier effect is not continuous and that there is no full employment requirement regarding the balance between production and employment, and that if the demand is low, the employment level will decrease and stagnation will occur. Keynes, who found the way out of this situation in fiscal and monetary policies, saw the intervention of the state in the economy as a necessity unlike the classical economists. Keynesian policies that spread after the crisis of 1929 began to lose their effectiveness in the 1960s. During this period, monetary policies regained priority, inflationary concerns increased and in development, statist policies supporting industrialization fell off the agenda. In 2008, the necessity of fiscal policies as a way out of the economic crisis was brought to the agenda again, and as a solution to the crisis, similar regulations and practices were applied to increase the weight of the state in the economy. Key Words: Keynes, Keynesian Economic Policy