Supply Side Policies Fiscal Supply Side Monetary

What is this city missing?

Learning Objectives To be able to define what supply side policies are To be able to analyse the use of supply side policies in a given scenario To be able to evaluate the effectiveness of supply side policies. Reflective Learners Creative Thinkers

Supply Side Policy Intention is to shift the aggregate supply curve to the right, increasing the long term productive capacity of the economy Price Level Real GDP AS1 AS2 Aggregate Supply Shift

Supply Side Policy Tend to be long-term policies – Politicians want quick fix for next election – Not a vote winner to think about ‘reducing the deficit’ when times are good. Arguments about how effective they are – Are lowering taxes an incentive? Or do people just take money without thinking? – Does reducing welfare benefits increase incentive to find work? Or does it encourage crime?

Supply Side Policies Policies aim to influence productivity and efficiency of the economy Key feature – open up markets and de- regulate to improve efficiency in the working of markets and the allocation of resources

Labour Market – Reduce impediments to free market, reduce bureaucracy and ‘red tape’ – Flexible labour markets – Reduce power of trade unions – legislation of the eighties still has an impact in this respect – Short term contracts – Flexible working arrangements – Hiring and firing – Contracts, terms and conditions, pay Criticism of such policies is that they put the needs of employers above those of workers which can lead to exploitation

Tax and Welfare Reform – More stringent benefit regime – Tax reform to encourage people to work – Improving access to training and education

Education and Training – Reform of 14 – 19 education – Modern Apprenticeships – Expansion of vocational qualifications – Expansion of university access

Incentives and technology – Tax reform to encourage incentives and entrepreneurial spirit – Incentives to develop new technology – investment – Drive to embracing ‘knowledge driven economy’ – Regional policies to encourage enterprise, investment, location, expansion

Singapore What Supply Side Policies?

Exam Style Question Discuss the extent to which supply side policies may affect employment and growth [18 marks]

Question Breakdown 1.Discuss – Discursive essay 2.Introduction – Rephrase question 3.Keywords in supply side Policies 4.Plan with Mindmap 5.Conclusion – Be decisive, no sitting on the fence!

Plenary – Which is most important? Labour reform Education reform Business incentives