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Stanford Center for International Development

Working Paper No. 442

Increased Understanding of Supply Side Economics

by

Anne O. Krueger

May 2011

Stanford University John A. and Cynthia Fry Gunn Building, 366 Galvez Street

Stanford, CA 94305-6015

Increased Understanding of Supply Side Economics

Anne O. Krueger

May 2011

Abstract Much has been learned about successful and unsuccessful economic policies for growth since the Second World War. For developing countries, important lessons have included the need for relying on the international trade as an “engine of growth”, the importance of reasonably stable macroeconomic policies, and the need for appropriate incentives for economic activity. These lessons have been learned both through experience and through analyses of successes and failures. The same is true for lessons for the industrial countries. There is much more appreciation of the costs of inflation, the appropriate relationship between private and public sectors, and many other issues. But with economic growth, new issues arise, and learning continues. This is true at present with the Great Recession, and the lessons that are being learned about both the importance of a well-functioning financial system and the types of measures that are warranted to provide financial stability. Keywords: Supply-side economics, policy analyses, international economy. JEL Classification No.: F01, F30, F40, N10, N20.

This is a slightly edited version of a paper presented at the Reserve Bank of Australia's conference held on February 9, 2010 celebrating its sixty years of existence. The paper is also included in my book The World Economy; Challenges for the Twenty First Century. Anne Krueger is Professor of International Economics at the School for Advanced International Studies, Johns Hopkins University. She is also a Senior Fellow of the Stanford Center for International Development (of which she was the founding Director) and the Herald L. and Caroline Ritch Emeritus Professor of Sciences and Humanities in the Economics Department at Stanford University. Email：annekrueger@jhu.edu