Keynesian economics is a macroeconomic theory named after British economist John Maynard Keynes. The consequences of the Great Depression of 1929–1932, prompted Keynes to rethink his economic approach, and at the end of the long process of writing he published The General Theory of  Employment, Interest and Money (1936). This book made Keynes the most influential economist of the twentieth century and introduced a new branch of economics -  macroeconomics. The book subverted the classical economics assumption that a competitive market economy is self-equilibrating, and that it always produces full employment. Keynes introduced the concept of  ‘underemployment equilibrium’ that required monetary manipulation by the central bank and extensive ‘socialization’ of investment to maintain full employment.

Keynes argued that government intervention was necessary in times of economic crisis to stimulate demand and prevent economic collapse. He believed that in a recession, individuals and businesses would cut back on spending, leading to a decrease in demand and a further decrease in economic activity. To combat this, Keynes advocated for government spending on public works, social programs, and other initiatives to boost demand and stimulate the economy.

One of the key concepts of Keynesian economics is the idea of the multiplier effect. This refers to the idea that an increase in government spending or investment leads to a larger increase in overall economic activity as money is repeatedly spent and re-spent in the economy. This, in turn, leads to an increase in employment and income, which further stimulates demand and contributes to economic growth.

Another key aspect of Keynesian economics is the idea of the trade-off between inflation and unemployment. According to Keynesian theory, if the economy is operating at full employment, increasing government spending to stimulate demand will lead to inflation. On the other hand, if the economy is in a recession, increasing government spending can help to reduce unemployment without causing inflation.

In the post-World War II period, until the end of the 1970s, Keynesian economics dominated economic thinking and public policy and was widely credited with helping to drive economic growth and prosperity in the developed world.

References:

Hall, P.A. (ed.) The Political Power of Economic Ideas: Keynesianism across
Nations (1989);

Keynes, John Maynard. The General Theory of  Employment, Interest and Money (1936)

Leijonhufvud, A. On Keynesian Economics and the Economics of Keynes (1968);

Patinkin, D. and Clarke Leith, J. Keynes, Cambridge and the General Theory (1977).