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Article: Supply-Side Economics
- Article from:
- Dictionary of American History
- Author:
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SUPPLY-SIDE ECONOMICS
SUPPLY-SIDE ECONOMICS
is based on the premise that high tax rates hurt the national economy by discouraging work, production, and innovation. President Ronald Reagan's adoption of supply-side economics as the underlying theory for his economic policy in the 1980s represented a major shift in U.S. economic thinking. Supply-side theory was far from new, however, its basic ideas dating back to the early-nineteenth-century works of Jean-Baptiste Say and David Ricardo. It had been ignored in the United States since the New Deal, because of the demand-side theories of the British economist John Maynard Keynes, who believed in raising income and reducing unemployment by ...