What is Supply Side Economics?


1.

*noun*; a subdivision of economics that focuses on addressing recessions by stimulating supply, rather than demand. During a recession, supply siders recommend cutting taxes rather than increasing government spending.

"Supply side" is in contrast to traditional practitioners of Keynesianism, "demand siders" who believe the main fiscal policy tool for recessions should be increased government spending.

Both supply siders and demand siders believe the government is responsible for formulating effective fiscal policy during recessions.

The most famous advocate of supply side economics was Arthur Laffer.

When Ronald Reagan ...promised to cut taxes ...he claimed tax revenue would go up, not down... as the economy boomed in response to lower rates. Since then, supply side economics ... has become a central tenet of Republican political and economic thinking in the country.

"McCain sticks to Supply Side Economics..." *International Herald Tribune* (24 March 2008)

See classical economics, keynesianism, keynesian, fiscal policy

2.

a macroeconomic theory that deals with the aggregate supplu curve instead of the aggregate demand curve. It is a patch to original Keynesian economics which were not concerned with aggregate supply.

supply side economics were responsible for the economic booms of the '20s '50s and '80s

See economics, supply, side, reagan, mellon


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