Supply-side economics

Supply-side economics is a school of macroeconomic thought which emphasizes the importance of tax cuts and business incentives in encouraging economic growth, in the belief that businesses and individuals will use their tax savings to create new businesses and expand old businesses, which in turn will increase productivity, employment, and general well-being. While all macroeconomics involves both supply and demand, supply-side economics emphasizes the importance of encouraging increases in supply. It was popularised in the 1970s by the ideas of Robert Mundell, Arthur Laffer, and Jude Wanniski. The term was coined by Wanniski in 1975.

Related Topics:
Macroeconomics - 1970s - Robert Mundell - Arthur Laffer - Jude Wanniski - 1975

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In 1978 Wanniski published The Way the World Works in which he laid out the central thesis of supply-side economics and detailed the supposed merits of low taxation and a gold standard.

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In 1983, economist Victor Canto, a disciple of Arthur Laffer, published The Foundations of Supply-Side Economics. This theory focuses on the effects of marginal tax rates on the incentive to work and save, which affect the growth of the "supply side" or what Keynesians call potential output. While the latter focus on changes in the rate of supply-side growth in the long run, the "new" supply-siders often promised short-term results.

Related Topics:
1983 - Arthur Laffer - Marginal tax rate - Save - Growth - Keynesian - Potential output

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A famous supply-side enthusiast nowadays is Lawrence Kudlow, who learned about supply-side economics in the 1970s and who constantly explains his capitalistic, supply-side views on the TV program Kudlow & Company on CNBC.

Related Topics:
Lawrence Kudlow - Kudlow & Company - CNBC

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