Supply Side Policies Policies designed to increase the country’s long-term potential output (supply) Aimed at moving the LRAS curve outward, (but may also.

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Presentation transcript:

Supply Side Policies Policies designed to increase the country’s long-term potential output (supply) Aimed at moving the LRAS curve outward, (but may also move the SRAS outward) Tools for achieving the 4 main economic objectives by impacting the supply-side of the economy

Supply Side Policies Deregulation Training / education Reform labour market Subsidies Increase incentives Infrastructure Supply side policies can be either ‘market based’ or ‘interventionist’.

Evaluation of Supply Side Policies Positive Negative Focus on longer term Expand economy without risk of inflation Address structural flaws in economy May improve current account through improved competitiveness Expensive Time lags No guarantee they will work as intended May be cut short by government change