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Originally Posted by jef
Thatcher was not Keynesian. The credit boom or 'boom and bust' business cycle was supplied by loose monetary policy. Oil revenues are extremely marginal as a proportion of GDP. Thatcher is mainly associated with the structural 'neo-classical' reforms of the goods and labour markets. It took over a decade for these reforms to materialize into lower unemployment and higher GDP growth and eventually higher real income. Most countries have subsequently undertaken similar reforms, especially the Nordic countries.
But when she came into office, Britian was struggling with mass unemployment and falling GDP. Maybe you are too young to remember this. I do although I also admit she made mistakes such loosen monetary policy you were referring to.
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Thatcher was Keynesian, she also increased public spending every year she was in office!!! She also cut taxes during a recession (classic Keynesian economics) to boost demand. A she deregulated large sections of industry and business to boost demand. She did this because of her tight restrictions on the money supply with extrememly high interest rates, she boosted demand at a time of little monetary growth. She was a Keynesian by practice, Monetarist by rhetoric.
And Monkey, I too lived through the Thatcher years, and only economists who foolishly believe in the old orthodoxy of classical economics think her record was good.
Anyway, everyone is a Keynesian now, if you believe in the concept of market failures then you are a Keynesian. Keynes also revolutionised economics, as before him, there was no concept of Macroeconomics and the idea of managing the economy.