Low productivity growth
Education, training, technology, and infrastructure can raise output per worker and productive capacity.
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Supply-Side Policy Simulator
Supply-side policies are government policies designed to increase the productive capacity, productivity, efficiency, or competitiveness of an economy. Their main goal is usually to increase long-run aggregate supply.
THE SUPPLY CHANNEL
Short RunChoose a policy to begin
Diagram shifts are slightly exaggerated for educational clarity. Not numerical forecasts. E₁ and E₂ are short-run equilibria. AD is held constant to isolate the supply effect; full long-run adjustment is not modeled.
Start with a policy
Choose one of the 14 policy cards. Change the time horizon to distinguish immediate effects from longer-term productive capacity.
MATCH THE POLICY TO THE PROBLEM
When should supply-side policies be used?
These policies mainly target longer-term improvements. They usually cannot quickly fix a recession caused by weak aggregate demand.
High structural unemployment
Retraining, education, and labor mobility programs can help workers gain relevant skills and reach available jobs. More AD alone cannot fix every mismatch.
Cost-push inflation
Lower bottlenecks and improved productivity can reduce unit costs, increasing SRAS. These changes may take too long to offset an immediate oil-price shock.
Long-term economic stagnation
Skills, infrastructure, research, and business investment incentives can improve the economy’s long-term capacity to grow.
Why might the results differ?
KEY TERMS · HOVER, FOCUS OR TAP