The Keynesian Doctrine and its Implications on Economic Policy

André Gonçalves de Freitas

André Gonçalves de Freitas

Mar 17, 20243 min read

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The Keynesian Doctrine and its Implications on Economic Policy

Introduction:

The Keynesian doctrine, named after renowned British economist John Maynard Keynes, revolutionized the way governments interact with the economy. This doctrine introduced the concept of using public budget as a tool for fiscal policy, which contrasted with prevailing economic concepts at the time. Keynes argued that during times of economic recession, the government could intervene and stimulate the economy through increased public spending. Conversely, during economic expansion, the government could use the public budget to prevent overheating of the economy. This approach, known as expansionary fiscal policy, aims to increase aggregate demand and stimulate production and employment.

The Mesa de Estudos Case:

In the context of public entities, the concept of impairment loss arises. Impairment loss is the amount by which the carrying value of an asset or cash-generating unit exceeds its recoverable amount. The recoverable amount is the higher of its net fair value and its value in use. In the case of a public entity's assets classified as fixed assets, there were indications of possible impairment at the end of the accounting period.

Connecting the Dots:

The Keynesian doctrine's emphasis on using the public budget as a tool for economic policy aligns with the concept of impairment loss in the Mesa de Estudos case. Both concepts revolve around the idea of assessing the value and effectiveness of assets or policies and making adjustments accordingly.

In the Keynesian model, the multiplier effect plays a crucial role in determining the impact of government spending on the economy. The multiplier effect refers to the magnified effect of an initial increase in spending on overall economic output. Similarly, in the Mesa de Estudos case, the assessment of impairment loss considers the potential impact on the overall value of the entity's assets.

Actionable Advice:

  • 1. Embrace fiscal policy as a tool for economic stabilization: Governments can adopt Keynesian principles by actively using fiscal policy to counter economic fluctuations. By strategically increasing or decreasing public spending, they can influence aggregate demand and stimulate economic growth.
  • 2. Regularly assess asset values and effectiveness: Just as impairment loss assessments in the Mesa de Estudos case help identify potential reductions in asset values, public entities should regularly evaluate the effectiveness and value of their assets. This allows for timely adjustments and optimization of resources.
  • 3. Understand the multiplier effect: Governments should have a clear understanding of the multiplier effect and how it can amplify the impact of fiscal policy. By considering the potential ripple effects of their spending decisions, policymakers can make more informed choices to achieve desired economic outcomes.

Conclusion:

The Keynesian doctrine's focus on fiscal policy as a tool for economic stabilization intersects with the concept of impairment loss in the Mesa de Estudos case. Both emphasize the importance of assessing the value and effectiveness of assets or policies to achieve desired outcomes. By embracing fiscal policy, regularly assessing asset values, and understanding the multiplier effect, governments can effectively navigate economic challenges and promote sustainable growth.

(Note: The above article has been created by incorporating the given content while connecting the common points and providing additional insights.)

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