The Laffer Curve And Its Effect On The People

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Introduction The point Arthur Laffer made when he brought up what later became “the Laffer curve” was that government implementations have both short and long term impacts on the people, and that those impacts are directly dependent on incentives: positive or negative. In their most primal forms, positive incentives would be subsidies and negative incentives would be taxes. The Laffer curve, although very hard to accurately estimate, is very powerful in its shape. The understanding of its shape is crucial for policymakers, but also a headache as its parameters are extremely difficult to comprehend and model properly. A background on Arther Laffer will be provided before getting into the Laffer curve in more detail. Finally, the…show more content…
Jude Wanniski, who was also present, started referring to the curve as the Laffer curve and the appellation was coined. Dr. Arthur Betz Laffer is an American economist who gained prominence during the Reagan administration for his theory on how tax rates affect the total revenues collected by the government. In the above quote, Dr. Arthur Laffer explains that increase in government revenue is not the true measure of a growing economy. A prosperous economy is one in which people have more income, more growth and more employment opportunities. Dr. Arthur Laffer was born in Youngstown, Ohio on August 14, 1940 to Amelia and William Gillespie. Both of his parents had an educational background in economics and this motivated him to pursue a career in it. Before going to Yale University to earn a B.A. in Economics, Dr. Laffer went to University of Munich and was majoring in Mathematics, but later he changed his major to economics. In order to further satiate his interest, he did his MBA and got a full scholarship to do his PhD in economics at the Economics school of Stanford University. In 1967, he accepted the offer from the University of Chicago to join as a faculty member. Dr. Laffer was eager to work alongside Robert Mundell, who was already part of the school’s faculty and was one of the earliest supply-side thinkers in the realm of economics. He worked there for two years and then
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