Differences in the stance of demand management policies, the authors argue, may have played a small role in explaining medium-term variations in GDP growth rates, and hence in differential employment performance, among the industrialized countries since 1973. They examine how a specific tool of macroeconomic policy – tax-financed increases in public expenditure on goods and services – could be used for employment creation. For this proposal to work, society would have to be ready to bear some (small) increase in taxes in exchange for the benefits of lower unemployment and better public services and infrastructure.
