The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Demand Management

  • G. D. N. Worswick
Reference work entry


The expression ‘demand management’ came into general use after World War II. The idea has its roots in the General Theory of Employment, Interest and Money (1936), in which Keynes had argued that in capitalist economies the aggregate demand for goods and services could fall short of the capacity of the economy to produce, with resultant unemployment. A deficiency of demand could be made good by governments increasing their expenditure or lowering taxes, or by the monetary authorities lowering interest rates to stimulate investment. Contrariwise, if there was excess demand, fiscal and monetary policy could be used in a restrictive manner. In the United States, ‘demand management’ never wholly displaced the term ‘stabilization policy’.

This is a preview of subscription content, log in to check access.


  1. Friedman, M. 1968. The role of monetary policy. American Economic Review 58: 1–17.Google Scholar
  2. Keynes, J.M. 1936/1973. The general theory of employment, interest and money. In Collected writings of John Maynard Keynes, vol. VII. London: Macmillan.Google Scholar
  3. Llewellyn, J., S. Potter, and L. Samuelson. 1985. Economic forecasting and policy. London: Routledge & Kegan Paul.Google Scholar
  4. Matthews, R.C.O. 1968. Why has Britain had full employment since the war? Economic Journal 78: 555–569.CrossRefGoogle Scholar
  5. Vines, D., J. Maciejowski, and J.E. Meade. 1983. Demand management. London: Allen & Unwin.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • G. D. N. Worswick
    • 1
  1. 1.