Reagan's Economic Policies: A Critique

Franco Modigliani

Oxford Economic Papers, 1988, vol. 40, issue 3, pages 397-426

Abstract: The Reagan administration is credited with one major success: the reduction in inflation. But it was not achieved painlessly, through "monetarism" and "supply" policies. Money growth swung widely and disinflation required, as always, a high and protracted unemployment rate. The deep tax cuts failed to increase saving, but contributed to the largest deficits in U.S. peace time history, high interest rates , dollar overvaluation, loss of competitiveness, and rising foreign d ebt. Output grew weekly as unemployment was high through 1987 and productivity growth low. Nonetheless, real per capita disposable income grew substantially, but thanks to the tax reductions and gains in terms of trade which are destined to reverse. Copyright 1988 by Royal Economic Society.

Date: 1988
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