Tobin disputed that most of the developed democratic and capitalist states adopted Keynesian demand policies managed after the World War II. 1950-1975 echoed unrivaled prosperity proven by an increase in the global trade and stability (TOBIN, J. 1983). It was around that time that most economies observed low inflation and unemployment rates. It is obvious that UK and western economies experienced maximum employment in the post-war era, because governments kept their dedications when it comes to full employment, basing on Keynesianism methods (pethoukokis, 2011). Before the 1980s, there was conventional knowledge suggesting stabilization of the real output in America’s economy because of the integrated and discretionary stabilization approaches putting in place after 1946, and specifically after 1961, just before the Second World War. This is an example of a vastly held empirical overview concerning the USA’s economy (pethoukokis, 2011).
On the other side, this oversimplification that the period after 1945 was firmer that the period before the Great Depression was disputed by Romer (Romer, C.1992).
According to him, the business sequence throughout the pre-Great Depression was somehow more harsh than economic uncertainty witnessed after 1945. For C. Romer, a close assessment of unemployment, industrial manufacture and Gross National Product (GNP) data showed that procedures used in conveying these data described systematic preferences in findings. Romer used reliable post-1945 and pre-1945 figures to prove that both booms and slumps were very severe during the time after 1945 (Romer, C.1992). The deduction made by Romer was that there was slight indication to conclude that the US economy before 1929 was more unstable than after 1945. Despite a little failure and volatility of real macroeconomic indicators, and the harshness of slumps between the pre-1916 and post 1945 periods, there is enough indication to assume that slumps reduced and became constant.
The influence of the Keynesian stabilization policies included stretching the post-1945 growths and averting extreme economic recessions (Romer,C 1992). It is apparent that the increased impact and spread of Keynesianism can be credited to a conservative opinion that economic stability during the post-war era was quite higher than in the pre-1914 era, which was depicted by the Keynesian revolution in economic strategies. The point is that the rise of Keynesianism is credited to incomparable economic success during the period between the end of the second World War and 1973 industrial market economies. This was because Keynesianism emphasized the significance of fiscal policy, which caused in the perfected economic execution during the “Golden Age” epoch (Atesoglu, H.1999).
Great functioning can be accredited to an intensification in the liberalization of the universal trade and transactions, uplifting economic strategies that led to minimal inflation rates in terms of buoyant aggregate demand, the amplified governmental support of buoyant internal demand, and the accretion of growth potentialities after the end of the second World. For example, GDP per capita in Western Europe augmented by 4.08 per cent during 1950-1973, the growth and expansion were seen in centrally designed economies, such as Africa , Latin America, and Asia.
The “Peak” of unrivaled economic success finished after 1973, with the economic stagnation of the 1970s steering to the fall of Keynesianism. The 1970s stagnation was described by the rising rates of inflation and unemployment, and the cut-rate of economic growth. According to Keynesian criticizers, the economic stagnation credited to the erroneous expansionary strategies embraced under the disguise of Keynesian economy. For example, from 1960 until 2002, average unemployment
