The rise of nationalistic governments has brought the trend to globalization in economic affairs into question. These reactions also question proposals for institutions of global governance to deal with global issues in a uniform manner and to create a more level playing field amongst nations. Instead what seems to be required is the combination of national control of policy providing global coordination. This essay suggests that a similar problem was faced in the aftermath of the breakdown of the gold standard and that the appropriate appreciation and application of Keynes’s proposal for a clearing union might be a fruitful solution.

To see what has become of Keynesian economics in the twenty-first century, this essay looks at three of the different ways in which the work of John Maynard Keynes (1883-1946) revolutionized economics: economic theory, economic policy and economic ethics. Although Keynes encouraged the production of many variations on his basic model, we can clearly identify what Keynesian economics is. Following the global financial crisis of ten years ago, there have been two waves of Keynesian economic policy: first, fiscal stimulus packages designed to help avoid another Great Depression and, more recently, a second, smaller wave to address the damage done by the austerity policies that followed upon the stimulus packages enacted in 2008-09. While Keynesian economic policies are once again being applied in many countries, revealing that there is indeed a Keynesian ethic, little work is being done to develop fresh Keynesian economic theories.

The article discusses the current impasse of the Eurozone in the light of Keynes’s international macroeconomics. In particular, it highlights the main faults that the European macroeconomic framework shares with the gold standard regime, and suggests that Keynes’s global reform plans can be of relevance to devising an alternative.

This paper analyzes the evolution of Keynesianism making use of concepts offered by Imre Lakatos. The Keynesian “hard core” lies in its views regarding the instability of the market economy, its “protective belt” in the policy strategy for macroeconomic stabilization using fiscal policy and monetary policy. Keynesianism developed as a policy program to counter classical liberalism, which attributes priority to the autonomy of the market economy and tries to limit the role of government. In general, the core of every policy program consists in an unfalsifiable worldview and a value judgment that remain unchanged. On the other hand, a policy strategy with a protective belt inevitably evolves owing to changes in reality and advances in scientific knowledge. This is why the Keynesian policy strategy has shifted from being fiscal-led to one that is monetary-led because of the influence of monetarism; further, the Great Recession has even led to their integration.

Mainstream economists felt that they could give themselves a pat on the back now that capitalist economies have reached the Great Moderation － economies that were hit by the global financial crisis in 2008, and then fell into the Great Recession. Many countries became dependent on an unconventional monetary policy. The negative interest rate policy (NIRP) that was seen as a trump card of this unconventional monetary policy was adopted by the Nordic countries, the European Central Bank in 2014 and the Bank of Japan in 2016. We will discuss the relationship between the controversy over the liquidity trap and NIRP and clarify that the NIRP puts pressure on banks’ profits, which leads to a decline in financial intermediation function and instability in the financial system.

This paper re-examines Hicks’s monetary theory, comparing it with Keynes’s theory, and offers a reading that bears out the conceptions of, “spectrum of liquidity” and “balance sheet equilibrium”. Hicks’s theory is summarized in three points; (1) “spectrum of liquidity”, (2) “balance sheet equilibrium”, and (3)“sequential financial policies”. However, in my opinion he did not consolidate these conceptions within a single integrated monetary theory.

  I redefine Hicks’s concept of “spectrum of liquidity” according to the length of time within which investors expect to obtain steady cash flows from their investments. The “balance sheet equilibrium” is understood as a sequential balanced investment in various financial and industrial assets. Moreover, I recommend sequential financial policies, short-term policies, as well as medium-term and long-term policies, in order to stabilize fluctuation and minimize risks in financial assets and real assets markets.

  I set up an analytical model used to examine a new interpretation of Hicks’s monetary theory, titled the “Frontier of Finance Model” (FFM). I reconstruct Hicks’s “balance sheet equilibrium” in this model and show how the financial system has evolved in economic history along a trajectory of financial and industrial investment.

Keynesian cross analysis has been criticized because it utilizes the ad-hoc consumption function. By introducing insatiable money preference into a macroeconomic model with dynamic optimization, Murota and Ono (2015) obtain a new consumption function with similar mathematical properties to the conventional ones and present a new Keynesian cross analysis. We extend it to a model that consistently treats a closed and a small open economy. While the conventional Keynesian cross analysis and the Mundell-Fleming model give different policy implications, our model gives consistent ones in the two cases. Government purchases increase aggregate demand while monetary policies do not.