Tuesday, October 6, 2009

U to W by Keynes

Keynes & shapes of recession
Just few months ago the world was swamped with images of the Great Depression. Thanks to media, each and every one who had access to 24X7 TV networks knew what a recession (if not depression) as financial analyst / economist took extra effort to showcase there awareness on the Great Depression and recession. The resurgent market and reviving economy has taken everyone by surprise and it seems that Keynes has rescued the global economy once again from depression; 70s saw ‘W’ shaped recovery which possibly could have been another painful ‘U’ shaped recession. The chart shows US's Federal deficit overlaid with shaded areas for NBER's recession. It seems that Keynes apart from changing 'U' to 'W' (shape of recovery) has also lowered the frequency of recessions.

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