Topic Eleven

Budget Deficits & Supply Side Economics

Required Readings:

• Waymaker Module: Policy Application
• James D. Gwartney, “Supply Side Economics“

Video Lecture Clips:

• Supply Side Economics/Reaganomics
• What’s Wrong with Budget Deficits – Part 1
• What’s Wrong with Budget Deficits – Part 2

Alternative Readings:

• Bruce Bartlett, “Supply Side Economics: Voodoo Economics or Lasting Contribution.”
• Planet Money: The No Brainer Economic Platform

LEARNING OBJECTIVES FOR TOPIC 11:

• You should be able to explain how budget deficits affect the economy in the short run and the long run.
• You should be able to explain the importance of the crowding out effect on the deficit “problem”.
• You should be able to explain the fundamental characteristics of Supply-Side Economics, and differentiate them from other schools of thought.