Economics News with a Historical Perspective
July 23, 2016
The Econ Review features a historical perspective on economics news and opinions with daily updates. All original material is copyrighted. Off-site references open in new windows.
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U.S. Budget Deficit
In the News
The Phillips Curve
John Cochrane uses very similar Phillips Curve charts to review recent history and current issues.
Euro Roller Coaster
The wild ride continues.
The latest news and views.
Reagan Tax Cut
August 15, 1981. President Reagan signed into law the Economic Recovery Tax Act, also known as the Kemp-Roth bill after its two principal sponsors, U.S. Representative Jack Kemp and Senator Bill Roth. The Reagan tax cut reduced marginal rates by about 23% over three years and instituted adjustments for inflation in the bracket limits. The latter eliminates "bracket creep" where individuals find themselves in higher tax brackets as incomes increase simply due to inflation even if real incomes do not change.
President Ronald Reagan
1980. The Reagan tax cut of 1981 marked the emergence of supply-side economics in the Federal government. After a decade of shifting opinions about the merits of the Keynesian demand-side and the classical supply-side viewpoints, the latter became dominant. The 1981 tax cut was specifically oriented toward increasing motivation for production by cutting marginal tax rates.
Oil Shocks Hit Supply Side
In the 1970's, oil prices rocketed to levels completely out of line with historical experience. The underlying cause was use of crude oil prices and availability as political weapons after war in the Middle East. Economists scrambled to understand the implications of these events for macroeconomic models. Models had not previously incorporated energy as a factor of production because the price of energy was relatively constant and thus not useful in explaining fluctuations in the economy. This was certainly not the case in the 1970's.
The Theory of the Firm and the Theory of the Consumer form the foundation for microeconomics. The Classic Economic Models collection includes the most important models from each, covering both the supply and demand for goods and the supply and demand for labor.
Additional models of interest are available at Classic Economic Models.
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