Keynesian economics
Named after economist John Maynard Keynes, who believed the best way to ensure economic growth and stability is via government intervention in the economy.
Named after economist John Maynard Keynes, who believed the best way to ensure economic growth and stability is via government intervention in the economy.
When times are good, a government should raise taxes and curb public spending to ensure the public finances are robust. As soon as times get harder, tax cuts to help those still in work should be accompanied by public spending on infrastructure projects, such as schools, road maintenance maybe even an Olympic village. That keeps people in work even as job losses hit the private sector. If people are kept in jobs they will keep on spending and borrowing, which in turn supports firms and reduces the impact of a recession. So the theory goes.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Is property investment still as safe as houses? Why golden era could be over
The golden era of property is over and investors are better off in the stock market, new research suggests
-
What Santander’s takeover of TSB means for customers
Santander is set to buy rival TSB for £2.65 billion. What does it mean for customers, and could we see the TSB brand disappear from the high street?