Friday, May 17, 2013

Journal Topic 13: Supply or Demand?

   Demand-sided policies are policies designed specifically to aggregate the economy at the time being. Whereas supply-sided policies are more policies designed to improve conditions in the long-run by increasing producer productivity or human capital and such things.
  From what I have observed I would say both demand-sided policies and supply-sided polices work equally well in different fields. Demand-sided policies are effective in dealing with a upcoming, unexpected situation that is imposing a huge problem. For example, when recession hit the globe in 2008, the efforts the US government made to restimulate the economy are examples of demand-sided policies. Among those are the lowering of taxes in order to give the average consumer more purchasing power. Taiwan also did something quite unique in attempt to stimulate the stagnant economy. THat year, President Ma gave out free coupons, you might say. It is basically free money that you can spend on the market and the shops will then take these coupons and transfer them into real, hard cash. This plans to stimulate the consumerism within Taiwan. Although this plan did not work as well as experts have hoped, it is a demand-sided policy.
  Supply-sided policies work well with long-term investments. In otherwords, it is something you put to make production better. An example of that being education. Education is not noramlly something you can see results in a matter of days. In order to fully expand upon your education, it takes years and years to develop. Yet once you do, this supply-sided policy is worth so many more demand-sided policies.e This is essentially what many governments, especially those in third-world countries are trying to achieve.

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