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The problem with this whole theory is that first of all, the whole future anticipation of taxes simply does not exist empirically specially not at low levels.
by nickik 8y ago
The problem with this whole theory is that first of all, the whole future anticipation of taxes simply does not exist empirically specially not at low levels.
You are correct that Keynesian share some things in particular situation with supply siders but its very superficial and only in very specific circumstances.
In theory tax cuts during a recession are a Keynesian policy but the WASTE majority of Keynesian prefer INCREASE in spending.
So in terms of the real world, there is almost never any overlap. Keynesian hardly ever actually argue for lower taxes (because they are usually leftists who want more government).
At the same time supply sider do not want tax cuts in order to boost Aggregate Demand in a business cycle but rather have a more competitive economy in the long term.
I would also recommend strongly to not look at these as two types of economic theories. Keynesian is a very specific theory about a specific situation. While supply side economics is a general branch of economics that looks at growth.
The terms here are really misleading, most economists including people who call them-self 'supply side' think that demand is equally important. Language really makes this whole discussion incredible complex.