and serious anomalies. On the surface, the eight years of the Reagan administration have been characterized by economic growth, a decline in unemployment, a reduction in inflation, and a generally healthy economy. Is this apparent 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 savings ratio, and increasing disparity between the "haves" and "have-nots" an indication of an economic disaster waiting to happen? Reactions to achievements of the Reagan years encompass a wide spectrum of views. Some economists 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 somewhere between the two extremes of euphoria and chaos.

In what follows we endeavor to seek this "truth" on the basis of the evidence presented in this volume as well as in other cited literature, and to provide broad conclusions that may aptly characterize the Reagan economic legacy. 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 limitations 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 policy that was first emphasized by candidate Reagan. The supply-side economic policies, in turn, encompassed several major economic policy stands: tax reductions, designed to stimulate the economy through increased incentives to save, invest, and work; spending cuts, designed to limit the size of the government, 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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