and serious anomalies. On the surface, the eight years of the Reagan adminis-
tration have been characterized by economic growth, a decline in unemploy-
ment, a reduction in inflation, and a generally healthy economy. Is this appar-
ent success due to what George Bush in 1980 referred to as "voodoo economics,"
or to what candidate Reagan called the "miracle of supply-side economics"?
Alternatively, are the record-breaking trade and budget deficits, declining sav-
ings ratio, and increasing disparity between the "haves" and "have-nots" an
indication of an economic disaster waiting to happen? Reactions to achieve-
ments of the Reagan years encompass a wide spectrum of views. Some econ-
omists and political activists believe that the Reagan era symbolized the miracle
of supply-side policies. These proponents have been euphoric over the success
of Reaganomics. In contrast, the opponents of Reaganomics believe that the
economic policy successes of the Reagan administration were deceptive as they
camouflaged symptoms of impending economic disaster. To these opponents,
Reaganomics led to a chaotic economic environment. The truth may lie some-
where between the two extremes of euphoria and chaos.

In what follows we endeavor to seek this "truth" on the basis of the evi-
dence presented in this volume as well as in other cited literature, and to pro-
vide broad conclusions that may aptly characterize the Reagan economic leg-
acy. We address three major policy aspects of this legacy--supply-side economic
policies, monetary policy, and international trade and exchange rate policies.
Clearly this focus ignores certain aspects of the Reagan era such as the social
and economic impact of a potentially widening gap between the "haves" and
"haves-not." These exclusions are unfortunate, but were necessitated by limi-
tations of space. However, the issues that we have addressed form, in our
view, the bases for Reagan's economic legacy.

Perhaps the cornerstone of Reaganomics was the supply-side economic pol-
icy that was first emphasized by candidate Reagan. The supply-side economic
policies, in turn, encompassed several major economic policy stands: tax re-
ductions, designed to stimulate the economy through increased incentives to
save, invest, and work; spending cuts, designed to limit the size of the govern-
ment, to balance the budget, and to keep the economic growth noninflationary;
tax reform, designed to simplify the tax structure; and deregulation, designed
to reduce the negative impact of government on the economy.

Reagan vehemently criticized the malaise caused by high inflation and high
interest rates under the Carter years. He derided these as the evil product of
large government expenditures (financed by large taxes) and the overblown size
of the government. He advocated business and personal income tax cuts to spur

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