The Economic Legacy of the Reagan Years: Euphoria or Chaos?

The Economic Legacy of the Reagan Years: Euphoria or Chaos?

The Economic Legacy of the Reagan Years: Euphoria or Chaos?

The Economic Legacy of the Reagan Years: Euphoria or Chaos?

Synopsis

The economic legacy of the Reagan presidency is the subject of this collection of contrasting essays. Noting the sharp disagreements that have termed Reaganomics either an economic miracle or an economic disaster waiting to happen, the editors and contributors provide an analysis of the empirical evidence on a number of issues: supply-side economics, monetary policy, foreign trade, and the regulatory environment. Each formal study is complemented with either a competing study, or a commentary that offers an alternative perspective. A final essay synthesizes the divergent theories to arrive at a tentative conclusion.

Excerpt

This book examines the economic legacy of the Reagan administration. The importance of economic policy during the Reagan administration cannot be overemphasized. The media-coined term Reaganomics has come to represent the economic policies of that era. Although the term is widely used both by the general public and academic economists, there is no consensus among economists on precisely what it means, let alone whether its overall impact was favorable or unfavorable for the U.S. economy. The staunchest supporters of Reaganomics are euphoric about the outcomes--low unemployment, stable prices, economic growth--and view the Reagan era as an unprecedented economic miracle. Critics of the Reagan policies feel that his economic legacy is the chaotic economic environment that President Bush inherited--unprecedented deficits, regulatory chaos, and exchange rate instability--and that the apparent prosperity camouflages an impending economic disaster. While these sentiments represent extreme views, they indicate a lack of consensus and a need to examine the Reagan era.

The purpose of this volume is to provide an analysis of the empirical evidence that comprises the Reagan economic legacy. This book addresses most of the important economic issues that are relevant to this legacy: "supply-side economics," monetary policy, foreign trade, and regulatory environment. Well- known academic economists with diverse institutional affiliations have contributed to this volume. As one would expect, their findings and observations do not always point in the same direction. We as editors have, however, examined their empirical findings and arrived at tentative conclusions.

We recognize that our coverage is not exhaustive. We have concentrated mainly on the first-level economic impacts of the Reagan policies and have not examined the welfare effects of Reagan's economic initiatives. Also, the vol-

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