When aggregate demand falls short of aggregate supply, governments must increase public spending.

That would have two adverse effects on aggregate demand and employment.

Until balance sheets are repaired, such zombie congestion restrains aggregate demand.

It is far too early to expect significant shifts in the major sources of aggregate demand.

The first key factor is deleveraging and the resulting shortfall in aggregate demand.

Together, these patterns could lead to an extended period in which aggregate demand limits growth.

Public investment is high enough expanding it now would shift the composition of aggregate demand in the wrong direction.

Debt drove growth, creating aggregate demand that would not have existed otherwise.

That is why the AIIB could bring a small but badly needed boost to global aggregate demand.

The economy in Europe and the United States, Krugman argued, had fallen from glory and returned to a pre World War II pattern of depression economics, in which its dominant features were shortages of aggregate demand, risks of deflation, financial crises, and liquidity traps.

Clearly, deficient aggregate demand has played a role by reducing the incentive to expand capacity.

US President Barack Obama s new administration announced a three year fiscal package intended to stimulate aggregate demand.

Even with very low interest rates, according to this view, investment demand will remain low, and therefore aggregate demand will remain insufficient.

The HICP excluding energy is expected to follow a downward pattern until 2010 , reflecting the weakening of aggregate demand .

And targeting exchange rate competitiveness doesn t address the aggregate demand problem.

Pessimists argue that the world economy suffers from an insurmountable shortage of aggregate demand, leading to a new secular stagnation.

In short, the world should not expect China to shore up global aggregate demand in 2015.

Accumulating excessive debt usually entails moving some part of domestic aggregate demand forward in time, so the exit from that debt must include more savings and diminished demand.

If these savings exceed investment needs, they could lead to inadequate aggregate demand, depressing economic growth.

It not only boosts aggregate demand directly it also expands potential output by increasing the stock of productivity boosting capital.

For the same reason, the lower price also gives a boost to aggregate demand in Europe, Asia, and other oil importing regions.

The right target for generating growth is domestic aggregate demand based on the right mix of consumption and high return investment.

Moreover, the US and China indeed, the entire global economy are suffering from weak aggregate demand, which is creating deflationary pressures.

In that case, countercyclical policies both fiscal and monetary could eventually be expected to plug the demand hole and get the economy going again, just as Keynesians argue.

After all, restoring stability and growth is only partly about reviving short term aggregate demand.

An undervalued currency also tends to produce an unbalanced growth model of the opposite kind an outsize tradable sector and insufficient domestic aggregate demand.

It also means getting the balance between domestic and external demand right, and appreciating the sensitivity of medium and long term growth to the composition (and size) of domestic aggregate demand.

Post crisis sluggishness in US aggregate demand especially consumer demand is likely to persist, denying Chinese exporters the support they need from their largest foreign market.

Seven years after 2008, global leverage is higher than ever, and aggregate global demand is still insufficient to drive robust growth.

In the absence of aggressive monetary and fiscal policies to support aggregate demand at full employment levels, the result is a vicious slow growth cycle.

There is a further major global advantage to a fund like the AIIB right now, the world suffers from insufficient aggregate demand.

Achieving a sustainable pattern of growth requires choices that affect not just the level of aggregate demand, but also its composition for example, investment versus consumption.

But falling core inflation (which excludes volatile energy and food prices) also points to weak aggregate demand.

While low return investments generate aggregate demand, they do not increase future income or productive potential, and thus do not foster sustainable growth.

But it remains unclear whether elevated asset prices are supporting aggregate demand or mainly shifting the distribution of wealth.

deposits at a negative rate . In these conditions , a protracted period of deflation caused by a sequence of negative aggregate demand shocks may limit the central bank 's ability to reduce real interest rates in order to stimulate demand and counteract deflationary pressures .

But the opposite of the excessive consumption model excessive reliance on investment to generate aggregate demand is also a self limiting growth pattern.

If structural reforms simply lower all wages and prices, it may indeed be difficult in the short term to counter the drop in aggregate demand.

When weak aggregate demand causes the economy to operate far below its potential, cuts in government spending enlarge the jobs deficit.

The essential economic problem is clear there is an almost desperate need for more fiscal space in the eurozone to boost aggregate demand, including more investment in Germany.

In China, for example, this involves less reliance on exports and public investment, and more on the private components of domestic aggregate demand.

Any persuasive explanation of these three developments must de emphasize a pure aggregate demand framework and focus on the rise of emerging markets, especially China.

Discretionary fiscal policy normally not suitable for short term demand management In the past , attempts to manage aggregate demand through discretionary fiscal policy making have been widespread but often counter productive .

Lower public spending reduces aggregate demand, while declining transfers and higher taxes reduce disposable income and thus private consumption.

How can growth be revived when austerity will almost surely mean a further decrease in aggregate demand, sending output and employment even lower?