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.

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.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

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

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.