The Econ Review

Economics News with a Historical Perspective

March 26, 2015

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.

About The Econ Review

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Opinions

U

U.S. Payroll Employment

Commentary on the latest U.S. payroll employment figures can be found at the Economics Roundtable.

 

In the News

Payroll Employment

Recent History   Long-Term Chart

U.S. Budget Deficit
Bar Graph
CBO Budget Projections
Historical Data

Inflation & Unemployment
The Phillips Curve

John Cochrane uses very similar Phillips Curve charts to review recent history and current issues.

The Chart Room
Charts for GDP and payroll employment show the historical patterns in this relationship.  Custom select side-by-side charts for these variables and interest rates and yield curves.

Euro Roller Coaster
The wild ride continues.

Economics Roundtable
The latest news and views.

Features

Volker Causes Recession

Volker Hits Brakes;  Recession Follows

1982  In a widely announced policy move, Paul Volker and the Fed slowed the rate of growth of the money supply to curtail the recent inflationary spiral.  Although some mathematical proofs exist that anticipated monetary policies have no real effects, the U.S. unemployment rate increased from 7.5% in 1981 to over 9.5% in 1982.

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Reagan Tax Cut

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.

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President Reagan

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.

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Models

The Mundell-Fleming Model

The IS/LM Model

The IS/LM Model changes the focus from factors of production (i.e. the Classical Model) to demand for output.  The equilibrating factor becomes the interest rate instead of the real wage rate.  Most importantly, the model demonstrates that the economy can be in a stable equilibrium at less than full employment.

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Additional models of interest are available at Classic Economic Models.


Econ Clubs

Check the directory of economics clubs to see if your club is listed. Links are free.


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