supply-side economics

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supply-side economics,

economic theory that concentrates on influencing the supply of labor and goods as a path to economic health, rather than approaching the issue through such macroeconomic concerns as gross national product. In the United States during the 1980s, supply-side economics was associated with conservative proponents of the free-market system. Such measures as tax cuts and benefit cuts to the unemployed are basic supply-side tactics, with the intention of increasing the incentive to work and produce goods and services. The theory holds that high marginal tax rates and government regulation discourage private investment in areas that fuel economic expansion, and that more capital in the hands of the private sector will "trickle down" to the rest of the population. The theory gained popularity during the late 1970s, with a tax revolt in California and economic hardship during the CarterCarter, Jimmy
(James Earl Carter, Jr.), 1924–, 39th President of the United States (1977–81), b. Plains, Ga, grad. Annapolis, 1946.

Carter served in the navy, where he worked with Admiral Hyman G. Rickover in developing the nuclear submarine program.
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 administration (1977–81). Arthur Laffer and his "Laffer curve" doctrine became the heart of the economic programs of Ronald ReaganReagan, Ronald Wilson
, 1911–2004, 40th president of the United States (1981–89), b. Tampico, Ill. In 1932, after graduation from Eureka College, he became a radio announcer and sportscaster.
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's presidency, during which tax rates were cut substantially. Although supply siders maintain that the tax cuts of the 1980s were responsible for the decade's economic growth, critics argue that such policies caused massive federal deficits, penalized the poor and middle class, and induced excessive speculation that severely damaged America's economy. The subsequent tax increases under Presidents George H. W. Bush and Bill Clinton and the concurrent corporate investment, economic growth, and drop in unemployment during the 1990s further undercut supply-side suppositions.


See V. Canto, Foundations of Supply-Side Economics (1983); R. L. Bartley, The Seven Fat Years (1992).

References in periodicals archive ?
Those 11 periods are the key to testing the supply-side theory.
Without dramatic supply-side reform, a high growth-led fiscal stabilization will not happen.
Having softened the beaches for the supply-side revolution, Bartley and friends now find themselves defending their historical legacy.
Bartley even takes pains to distinguish supply-side policies from Reagan-omics, perhaps because Reagan eventually signed onto tax hikes that, among other things, actually increased taxes on capital.
Since early this year, price pressures have been building up largely on account of supply-side factors such as rising international oil prices, the impact of higher excise taxes on selected consumer items, as well as rising food prices due to weather and supply distribution disruptions in certain commodities.
'The driver of inflation is largely supply-side challenges which need to be addressed by improving productivity.
Espenilla reiterated that supply-side factors are the main drivers of overall inflation such as rising international oil prices, higher excise taxes, and weather disturbances that affected food supply.
range, while South Africa, Brazil and Russia are expected to see supply-side growth potential below 2% p.a.
Policymakers anticipate growth of 2.5 per cent this year, well in excess of the growth of the supply-side economy.
By now, however, every American who is objective or can do math should know that the proposed supply-side tax cuts wonEt really stimulate the economy.
Republicans these days don't often use the term "supply-side economics," which has been pejoratively dubbed "( trickle-down " or even "( voodoo " economics 6 the latter by none other than former President George H.
Supply-side economists said the solution was to reverse the policy mix: a tighter monetary policy and a "looser" fiscal policy in terms of lower marginal tax rates that would increase the responsiveness of supply.