The Formation And Development Of Macroeconomic Theory And The Great Depression

The new theory comes when the current economic circumstance cannot beexplained. The Great Depression in1930s severely smashed the world economy andno explanations and policies were provided by the classical laissez-faire until theRoosevelt New Deal took the world economy out of depression. Themacroeconomic theory has been brought out by John Maynard Keynes. Early thiscentury, not only did the US Sub-prime crisis strongly affect the world economy, butalso the macroeconomic theory. The development of the macroeconomic theory afterthe Sub-prime crisis becomes a hot topic.This dissertation aims to analyses the relationship between the Great Depressionand macroeconomic theory development after the Sub-prime crisis, and the newtheory of the macro economy. It consists of5parts:The first chapter reminisces the history of the Great Depression and the defect ofthe classical laissez-faire. In chapter2, the author makes a summary on the research ofGreat Depression. By analyzing the Great Depression, chapter3discusses how itinfluences the macroeconomic theory. Chapter4tries to focus on the US Sub-primecrisis. The last chapter gives a possible further exploration on macro economy in thepost Sub-prime crisis era.This dissertation tries to have a further study on the macroeconomic theory andexpolre the future of the theory after the Sub-prime crisis, particularly on how, in whatway and when the government should rule the market. The research also proves thatthe Sub-prime crisis was caused by the failure of the government and the market. Thedissertation suggests that that the internationalization of government and market willbe the future of the macroeconomic theory. This dissertation belives that theinternational cooperation from governments will surely play an important role inpreventing the severe economic crisis.