Which model suggests that government intervention can stabilize an economy?

The Keynesian model suggests that government intervention can stabilize an economy, particularly during periods of economic downturns or recessions. This model, developed by economist John Maynard Keynes during the Great Depression, argues that aggregate demand is the primary driving force in an economy and that it can be affected by changes in fiscal policies, such as government spending and taxation.

In times of economic distress, such as high unemployment and low consumer spending, Keynesians advocate for increased government spending to stimulate demand, boost economic activity, and help stabilize the economy. This approach contrasts with other models where the role of government intervention is limited or where markets are expected to self-correct without government involvement. The Keynesian perspective emphasizes the importance of active policy measures to mitigate the effects of economic fluctuations and promote overall economic stability.