Record Details

Supply-side economics and the 2017 Tax Act

Journal of Economics and Political Economy

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Title Supply-side economics and the 2017 Tax Act
 
Creator JOHNSON, Clark
 
Subject Supply side economics; Robert Mundell; Policy Mix classifications; 2017 Tax Act; Eurozone macroeconomics.
B30; E30; E50; E60; F20.
 
Description Abstract. Abstract. Several of the designers of the 2017 Tax Act were prominent as ‘supply side‛ advocates at the time of Reagan tax cuts during the 1980s. The economic argument for supply side tax rate reductions drew on a policy mix framework developed by Robert Mundell as early as 1962. Within that framework, the easy fiscal/ tight monetary policy solution was intended for circumstances of either pressure on reserves or the exchange rate (as during the Kennedy Administration) or of serious domestic inflation (as under the Carter and Reagan Administrations). Tax cuts in the US since the 1980s have not had the intended stimulus effects because neither the currency weakness nor inflationary preconditions have existed. Absent such conditions, tax rate reductions will generate either domestic over-heating or a redistribution of income to those in higher brackets. Any argument in favor of the 2017 Tax Act should not fall back on Mundell’s policy mix advocacy. In contrast, the case for an easy fiscal/ tight money policy may have unexpected force in situations of fixed exchange rates, or where domestic monetary policy options are otherwise constrained or absent – as in Eurozone periphery countries.Keywords. Supply side economics, Robert Mundell, Policy Mix classifications, 2017 Tax Act, Eurozone macroeconomics.JEL. B30, E30, E50, E60, F20.
 
Publisher Journal of Economics and Political Economy
Journal of Economics and Political Economy
 
Contributor —
 
Date 2018-03-18
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
 
Identifier http://www.kspjournals.org/index.php/JEPE/article/view/1556
10.1453/jepe.v5i1.1556
 
Source Journal of Economics and Political Economy; Vol 5, No 1 (2018): March; 27-37
Journal of Economics and Political Economy; Vol 5, No 1 (2018): March; 27-37
2148-8347
 
Language eng
 
Relation http://www.kspjournals.org/index.php/JEPE/article/view/1556/1838
 
Rights Copyright (c) 2018 Journal of Economics and Political Economy
http://creativecommons.org/licenses/by-nc/4.0