Supply-side policy

Updated: Aug 20, 2021

A policy intended to increase the aggregate supply available in an economy. Supply-side policies could include reform of the social security system to encourage the supply of effort; improvement of education and training to raise the productivity of the labour force; reform of restrictive practices and removal of restrictions on market entry to improve efficiency; or reform of the tax system to encourage the devotion of more effort to production and less to tax avoidance and evasion. Such policies are contrasted with management policies, which seek to increase and stabilize aggregate output by controlling effective demand.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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