If it sometimes seems that aggregate demand (AD) gets all the attention, this is with good reason. From the 1940s onwards, Keynesian demand-management policies dominated the macroeconomic management schemes of finance ministers. These policies put heavy emphasis on the use of government spending to stimulate the economy, spending that often required increases in either taxes or government debt to finance the resulting deficits. Until well into the 1960s, healthy growth rates among many rich and developing countries appeared to validate the Keynesian demand-management approach.
However, by the late 1960s and early 1970s, as rich economies sputtered and inflation grew more serious, the protests of neo-classical scholars were gaining a wider audience. What followed, in the macroeconomic debates of the 1980s and beyond, emphasized a variety of new perspectives, including an emphasis on money and inflation control (evident in the work of the monetarist school), as well as a renewed focus on creating a healthier environment for business to flourish. This emphasis on the supply side of the macroeconomic equation would eventually shake, if not reorient, the centrality of the Keynesian paradigm.
