8/18/2019 Pros and Cons of SSP

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Supply-side policies

Pros Cons

• May be targeted at particular

sections of the economy  reaiseeciency

• Successful application can shift outLRAS increase growth reduce PL

• Can achieve

o !ncreased production potential of

economy do Lower prices

o !ncrease level of real output  

lower "n#o !mproved eciency

o !ncreased competitiveness for

$rms to improve %&P

• Policies that cut ta' rate  increaseincentive to wor( ∵  as income )

employment increase  more ta'rev*

• #du ) training

o #'penditure may be insucient

to guarantee permanent +obs

without ensuring ade,uate levelof A

o .eeds to be accompanied by

appropriate $scal / monetary