Keynesian Economics After All

TL;DR

This paper shows that the US economy has historically followed Keynesian principles, driven by war-related government spending, as evidenced by correlation analysis between stock market fluctuations and public debt.

Contribution

It demonstrates a long-term Keynesian influence on the US economy through correlation analysis, linking wars to economic upturns independent of official policies.

Findings

Strong correlation between DJIA fluctuations and US public debt during wars.

Wars have historically driven economic upturns in the US.

Keynesian economic patterns are evident regardless of official policy.

Abstract

It is demonstrated that the US economy has on the long-term in reality been governed by the Keynesian approach to economics independent of the current official economical policy. This is done by calculating the two-point correlation function between the fluctuations of the DJIA and the US public debt. We find that the origin of this condition is mainly related to the wars that the USA has fought during the time period investigated. Wars mean a large influx of public money into the economy, thus as a consequence creating a significant economical upturn in the DJIA. A reason for this straight-cut result of our analysis, is that very few wars have been fought on US-territory and those that have, were in the 18th century, when the partial destruction of cities, factories, railways and so on, was more limited and with less effect on the over-all economy.