The following points highlight the seven major criticisms of the Keynesian theory of trade cycle. Some of the criticisms are: 1. Half the Explanation 2. Psychological Theory in a New Form 3. Neglect of the Role of Accelerator 4. No Explanation of the Trend of Growth with Business Cycles and Others. Keynesian Theory of Trade Cycle Criticism # 1. Half [...]
Keynes did not build up his own exclusive theory of the trade cycle. But he made such important contributions to the analysis of depressions and inflation that his disciples could give a systematic account of the upturn and the downturn in economic activity. In his General Theory, Keynes thought it sufficient to add "Notes on the Trade Cycle." These notes [...]
The following points highlight the six major criticisms of Hayek’s theory of the trade cycle. Some of the criticisms are: 1. Restrictive Assumption of Full Employment 2. Unrealistic Assumption of Equilibrium 3. Undue Importance to Interest Rate Changes 4. Unreal Concept of Forced Saving and Others. Criticism # 1. Restrictive Assumption of Full Employment: The theory is based on the [...]