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Printable Handouts
Navigable Slide Index
- Introduction
- Major schools of thought before 1936 (1)
- Mercantilism
- Physiocrats
- Classical school of thought
- 1936: a turning point?
- Keynesian school of thought (1)
- Keynesian school of thought (2)
- School of Monetarism (1)
- School of Monetarism (2)
- Neoclassical school of thought
- The Austrian economics (1)
- The Austrian economics (2)
- The Austrian economics (3)
- Post-Keynesian economics
This material is restricted to subscribers.
Topics Covered
- Mercantilism
- Physiocracy
- Classical economics
- Keynesian economics
- Monetarism
- Neoclassical economics
- Austrian economics
- Post-Keynesian economics
Talk Citation
Cohen, I.K. (2015, September 30). Schools of thought in macroeconomics [Video file]. In The Business & Management Collection, Henry Stewart Talks. Retrieved December 14, 2024, from https://doi.org/10.69645/MFKK5307.Export Citation (RIS)
Publication History
Other Talks in the Series: Macroeconomics
Transcript
Please wait while the transcript is being prepared...
0:00
Hello.
My name is Ivan Cohen
and I'm an associate professor
in finance and economics
at Richmond University,
The American International
University in London.
And this is the last talk
in the series
in which we're going to
look at schools of thought
in macroeconomics.
The way people think about
macroeconomics or the economy
in general depends
often on the circumstances
of the time.
That is to say, when economists
are trying to work out
how the world
around them works,
it's influenced by the circumstances
they face.
So we're going
to start by going back in time
and seeing how macroeconomics
was viewed before 1936.
And in a short while,
I'll make it clear
why 1936 is considered
such an important year.
0:51
Before 1936, we can look at
a progression of ideas
from mercantilism
through the physiocrats
into orthodox
or classical economics.
1:07
Mercantilism
was the dominant idea
in Europe in the 16th
to the 18th centuries.
Essentially,
mercantilism promotes
government regulation
of a nation's economy
for the purpose of
promoting state power
at the expense
of rival national powers.
It's really all about
trying to maintain
the league position
of a national economy
compared
to other national economies.
And back in the 16th
to the 18th century,
it was felt the way to do this
was the accumulation of wealth.
And wealth was primarily seen
as being the hoarding of gold,
and in particular,
the hoarding of gold
by promoting
a positive balance of trade.
This means
that an economy needed
to promote its exports
and deter or prevent imports.
And you can see this just with
a superficial glance at history.
This is what is
at the heart of European
expansionism and imperialism
during the building
of the European empires
during those
16th to 18th centuries.
Now on the slide,
there is a list
of some of the key thinkers
which you're welcome to go
and look up.
You may google them
at your own time.
I'm not going to spend any time
discussing these
individual thinkers.
However,
mercantilism soon came to be
regarded as incorrect.
That is to say
that the wealth of a country
is not really manifest
in the amount of gold it has.
This was first shown
by a chap called David Hume,
a nice Scotsman,
using something called
the price-specie flow mechanism.
Put simply, this says that
if a country exports
more than it imports,
those exports
have to be paid for
by other countries
and that leads to
an inflow of gold
into the country.
The inflow of gold increases
the supply of money
in the country
and that
in the short to medium term,
what this is likely to do
is become inflationary.
And therefore,
the price of that country's
exports will start to go up
and the amount of exports sold
will come down.
And therefore,
any immediate trade surplus
will be reduced
by the inflow of gold.
So we have an impact
from the balance of trade
through the movement of specie,
which is gold,
and that therefore
impacts the money supply
and impacts inflation.