Supply-Side Economic Model

A Supply-Side Economic Model is a macroeconomic model which predicts that economic growth can be most effectively created by lowering barriers for people to supply (produce) goods and services.

Context:
- It can (typically) espouse a Tax Cut Program (so that lower taxed agents will invest their saving in companies and increase production).
- It can be espoused by an Supply-Sider Economist (who believe that supply creates demand).
- It can be related to Trickle-Down Economics.
Example(s):
- as espoused by the U.S. Republican Party, since the Reagan Years.
- …
Counter-Example(s):
- Keynesian Economics.
See: Macroeconomics, Economic Growth, Marginal Tax Rates, Laffer Curve.

References

(Wikipedia, 2018) ⇒ https://en.wikipedia.org/wiki/supply-side_economics Retrieved:2018-2-12.
- Supply-side economics is a macroeconomic theory that argues economic growth can be most effectively created by lowering taxes and decreasing regulation. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices and employment will increase. It was started by economist Robert Mundell during the Ronald Reagan administration. The Laffer curve is one of the main theoretical constructs of supply-side economics, the idea that lower tax rates when tax level is too high will actually boost government revenue because of higher economic growth. ^[1] The term "supply-side economics" was thought for some time to have been coined by journalist Jude Wanniski in 1975, but according to Robert D. Atkinson the term "supply side" was first used in 1976 by Herbert Stein (a former economic adviser to President Richard Nixon) and only later that year was this term repeated by Jude Wanniski. Its use connotes the ideas of economists Robert Mundell and Arthur Laffer. Critics prefer the term “trickle-down economics”.

http://www.encyclopedia.com/finance/encyclopedias-almanacs-transcripts-and-maps/supply-side-theory
- QUOTE: Supply side theory is an approach to economics based on the idea that the best way to make the economy grow is to encourage businesses to supply more goods and services for purchase. Supply and demand are the basic forces that shape all economic activity. ...
  ... Supply siders, as those who believe in supply side theory are sometimes called, generally believe that supply creates demand, so they encourage governments to craft policies that will result in increased production. Often this translates into a consistent program of tax cuts, especially cuts in income taxes (the taxes individuals pay on the money they earn each year) and in taxes that affect businesses. The money that individuals and businesses save will, in the view of supply siders, be invested in businesses, which will increase production and cause the economy to grow.