Supply-side economics
The supply-side economics ( supply-side economic policy) is an economic policy concept that is based on the assumption that employment and growth of an economy depends primarily on the cost of the supply side. Companies would decide on the basis of their income or expected returns on investment and thus also on the creation of jobs. The focus is on improvement of investment conditions. On state intervention in the economic process should be largely dispensed with.
The supply-side policy represents an alternative to the Keynesian concept of demand management, through to monetarism. Critics see supply-side economics as a cover for the trickle-down theory (if the wealth of the richest climb, seeping down through prosperity for all ), for which there is no empirical evidence.
Theoretical foundations
Theoretical basis of supply-side policy is the neoclassical economic theory. Thereafter, the private sector is a stable system, economic fluctuations based on exogenous shocks and market imperfections. In essence, the supply theory goes back to the saysche theorem, thus also subject to his criticism.
The supply policy based on the assumption that lower business costs the economy directly promote as higher government spending or cash consumers.
Measures
Mean of the offered policy are:
Monetary policy:
- Inflationsvermeidende a monetary policy that is aligned with the growth of potential output
Fiscal policy:
- Reduce the government's share
- Reduction in net borrowing
Tax policy:
- Reduction of corporate taxation
- Improvement to the tax breaks
- Performance and innovation-promoting change the tax system
Labor market policies:
- Restrained wage policy
- Promote workers' mobility
- Promoting flexibility of wages, hours and conditions of employment
- Promote start-ups
Other:
- Deregulation
- Promotion of research and development
History
The supply-side policy has been developed by economists in the 1930s and taken up again in the 1970s. A supply-side economics in the U.S. was partly under Ronald Reagan ( Reaganomics ), in Britain under Margaret Thatcher ( Thatcherism ), in New Zealand under Roger Douglas ( Rogernomics ), in Ireland and elsewhere practiced. In these countries, the inflation rate declined in the subsequent period between 1980 and 1983 significantly, but at the cost of rising unemployment and lower economic growth, which was attributed mainly to the change in monetary policy. The assessment of the longer term impact is considerably more difficult because it is often found a more or less large discrepancy between Announced and actually actualized economic policy.
The majority of economists in Germany tended to in the last years of the supply-side policy. Thus, formulated in 2005, more than 250 German professors of economics a supply-oriented basic consensus in Hamburg appeal. After Michael Huether, a signatory of the Hamburg appeal, was " always also been part of the supply-side economics " that is expected with strong declines in demand, such as in the context of the financial crisis from 2007, overburden the adaptability of economic supply side, from a Keynesian situation which then make a demand policy urgent.