20 Facts About Supply-side economics

Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade.

Basis of supply-side economics is the Laffer curve, a theoretical relationship between rates of taxation and government revenue.

Supply-side economics developed in response to the stagflation of the 1970s.

Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances.

Supply-side economics rose in popularity among Republican Party politicians from 1977 onwards.

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Supply-side economics has originated as an alternative to Keynesian economics, which focused macroeconomic policy on management of final demand.

Demand-side Supply-side economics relies on a fixed-price view of the economy, where the demand plays a key role in defining the future supply growth, which allows for incentive implications of investment.

Unlike supply-side economics, demand-side economics is based on the assumption that increases in GNP result from increased spending.

Supply-side economics highly depends on the implications, which follow from the relationship presented by the curve.

Supply-side economics criticized them for following a simplistic "economic growth will solve all problems" approach, when previous presidential economic advisors had been more nuanced, recognizing the unavoidable tradeoff between equity and efficiency in their approaches to managing the economy.

Supply-side economics holds that increased taxation steadily reduces economic activity within a nation and discourages investment.

Supply-side economics economists have less to say on the effects of deficits and sometimes cite Robert Barro's work that states that rational economic actors will buy bonds in sufficient quantities to reduce long-term interest rates.

Supply-side economics concluded that the notion that governments could raise more money by cutting rates "is unlikely to be true at anything like today's marginal tax rates.

Proponents of supply-side economics have sometimes cited tax cuts enacted in the 1920s as evidence that tax cuts can increase tax revenue.

Proponents of supply-side economics sometimes cite tax cuts enacted by President Lyndon B Johnson with the Revenue Act of 1964.

Economist Gregory Mankiw used the term "fad Supply-side economics" to describe the notion of tax rate cuts increasing revenue in the third edition of his 2007 Principles of MacroSupply-side economics textbook in a section entitled "Charlatans and Cranks":.

An example of fad Supply-side economics occurred in 1980, when a small group of economists advised Presidential candidate, Ronald Reagan, that an across-the-board cut in income tax rates would raise tax revenue.

Supply-side economics falsely asserted that the CBO had found the "entire $1.

In other words, supply-side economics is a classic example of a zombie doctrine: a view that should have been killed by the evidence long ago, but just keeps shambling along, eating politicians' brains.

Mr David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows.