Prosperity, great compression and Reaganomics: lessons for economic policy
Prosperity, great compression and Reaganomics: lessons for economic policy

Summary/Abstract: During the 20th century USA went through several radical swings of economic policy beingthe response to drastic societal, technological and ideological transformations. American economyendured several crises and experienced intensive sustained growth, which eventually transformed itinto the world powerhouse. Basing on its historic record and with the benefit of hindsight, relevantlessons for economic policy can be derived. Three sub-periods of the American economic history,i.e. Prosperity (1920-1929), Great Compression (1937-1947), and Reaganomics (1981-1989), havebeen subject to positive analysis with the goal of suggesting answers to fundamental dilemmasof political economy. Particular attention is drawn towards evolution of institutional environment,income distribution policy and theoretical assumptions underlying policy making. We highlightthe most prominent ideological pitfalls, which materialized in the American economic history, butwhich have not been properly addressed by the policymakers and engendered pathological processesin the political and social systems.

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