Reaganomics was a controversial economic strategy implemented by Ronald Reagan in the 1981 to, "increase saving and investment, increase economic growth, balance the budget, restore healthy financial markets, and reduce inflation and interest rates."
Four major policy objectives:
1. Reduce the growth of government spending
2. Reduce the marginal tax rates on income from both labor and capital
3. Reduce regulation
4. Reduce inflation by controlling the growth of the money supply
Notable things it did right:
- Unemployment rate declined from 7% to 5.4%
- Real GDP per working adult increased at a 1.8 percent rate
- The inflation rate declined from 10.4% to 4.2%
- Ultimately it was responsible for sharp reductions in marginal tax rates and in inflation
Bad things after Reaganomics:
- Privately held federal debt increased from 22.3%of GDP to 38.1&
- The failure to address the savings and loan problem early led to an additional debt of about $125 billion
- The share of U.S. imports subject to some form of trade restraint increased from 12% to 23%
Source: http://www.econlib.org/library/Enc1/Reaganomics.html
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