ABSTRACT
Changes in programmes of governmental expenditure on goods and services are likely to be liable to severe adjustment lags and costs. Suppose that a decision had been taken that for control purposes it was desirable to reduce governmental expenditure on goods and services by £x million. Such a decision would involve a revision of defence, educational, industrial or other governmental policies. The revision of the relevant programmes is bound to involve real cost in disturbance of long-term policies and to take time before there can be any actual reduction in expenditure. The adjustment lag is in this case considerable. It is true that the effect lag on the demand-management target is zero, since the actual variation of governmental purchases of goods and services is simultaneously both a change in the control (government expenditure) and also a change in its effect on the target (the level of total expenditures). But on the grounds of the length and cost of the adjustment process governmental programmes of expenditure on goods and services cannot be regarded alone as providing sufficiently flexible and prompt regulators.
