For most of the post-war period, economic policy has been the battleground on which elections have been won or lost. Understanding Economic Policy provides a framework for understanding the nature of economic policy and its making. In an accessible and non-technical way it outlines two models of economic policy: a laissez-faire, liberal approach of the kind associated with recent Conservative governments, and the type of managed economy normally identified as Keynesian. Both the micro and the macro implications of the approaches are considered at length. The author discusses both models in the context of economic policy since the war. The Labour governments of 1945-51 are seen to lay the foundations for the years of consensus which preceeded the Thatcher era. He concludes by considering the prospects for economic policy in the 1990s in the wake of events including ERM entry. This book should be of interest to lecturers and students of economics, politics, business studies.