What is the name of the economic theory that advocates for government intervention to stimulate economies?

The economic theory that advocates for government intervention to stimulate economies is Keynesian economics. This theory, named after economist John Maynard Keynes, emerged during the Great Depression in the 1930s. It emphasizes the importance of total spending in the economy (aggregate demand) and suggests that during periods of economic downturn, governments can mitigate the effects of recessions through proactive fiscal policies—such as increased public spending and tax cuts—to boost consumer demand and encourage economic growth.

Keynesian economics argues that markets do not always adjust naturally and that without government intervention, economies could remain stagnant or face prolonged periods of high unemployment. By advocating for government action, Keynesian economics stresses the role of the state in managing economic cycles and promoting overall economic stability.

In contrast to other economic theories, like classical economics, which emphasizes free markets and minimal government intervention, or monetarism, which focuses on the control of the money supply, Keynesian economics specifically supports the idea that strategic government actions can create demand and stimulate economic activity during adverse conditions.