Page 23 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 2, 2016, pp. 21-26

According to the neo-Keynesian approach, it may involve both short-term and
long-term government investments in activities aimed at job creation. This approach
has unintended ly influenced the Norwegian social democratic opposition in
Parliament. Its response to today's economic stagnation caused by the crisis in the
Norwegian oil and gas sector and migration crisis with rapidly growing
unemployment opposition demands to the government immediate action in terms of
the development of public sector jobs, and emergency work as to plug the used oil
wells in the North Sea. "Dig a hole," grave like into a hole in the earth to create
employment, wrote Keynes in his theory. The incumbent government is
characterized, however, by government inaction against rising unemployment and
hoping for the market to settle with private entrepreneurs in the lead.
Austerity measures Precautions in the public sector and government inaction
by the recession and rising unemployment declined strongly of neo-Keynesians.
Tightening will result in further unemployment in a vicious circle. It does not help in
the short term to reduce bank interest rates to zero as a means toward economic
stagnation, they argue. For the lack of demand in the economy nationally and
internationally prevents borrowing and investments regardless of interest rates. The
use of tax policy with reduction of tax to increase investment is not an effective
instrument for the same reason, they pointed out [Ibid].
The two American Nobel Prize winners in economics, Joseph Stiglitz, and
Paul Krugman are our time most famous exponents of the neo-Keynesian economic
theory with its political diversions in combating the negative effects of crisis and
recession. These two economists representing the academic prestige at a high level,
the read and referenced, but has so far been partially rejected by those with political
power in the EU and Europe. The rejection has been shown clearly in connection
with their published counterargument against austerity measures that the EU and
IMF have imposed distressed countries like Greece. Counterarguments, their
oversights. Now it seems the vision of the EU on the importance of governmental
tools and interventions to change in the wake of refugee and migration crisis. The
return of Keynesian policies in the new form, with a government friendly
international solidarity perspective, hanging obviously along with that neoliberalism
is on the verge of collapse in Europe as a result of the ongoing financial crisis, the
euro crisis, and the refugee crisis
We see economists Stiglitz [Stiglitz, J. 2010] and Krugman [Krugman, P. and
R. Barro 2010] currently in the process of adopting the same critical but central role
played by the economist John Maynard Keynes, in the postwar years and created a
theoretical basis for a political way out of the deep international economic
depression culminating in 1929 and subsequent years. His theories were caught by

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