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Macroeconomic Stability and Inclusive Growth

Author

Listed:
  • Mr. Hamid R Davoodi
  • Mr. Peter J Montiel
  • Anna Ter-Martirosyan

Abstract

We survey the literature on the relationship between macroeconomic stability and inclusive growth and identify gaps in our knowledge. We examine the role of macroeconomic policies (fiscal, monetary, macroprudential, and exchange rate) and measures of inclusiveness (income inequality, consumption inequality, wealth inequality, poverty, and unemployment) across countries at different income levels. Avoiding procyclical macroeconomic policies and mitigating macroeconomic volatility should be on the agenda of all policymakers concerned with promoting inclusive growth. The emerging theory and evidence suggest a strong role for macroeconomic policies in shaping inclusive growth, both in the short-run and the long-run. The two-way relationship between the macroeconomy and inequality underscores the challenge of identifying and estimating causal relationships. Models with heterogeneous agents have much to offer in this area.

Suggested Citation

  • Mr. Hamid R Davoodi & Mr. Peter J Montiel & Anna Ter-Martirosyan, 2021. "Macroeconomic Stability and Inclusive Growth," IMF Working Papers 2021/081, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/081
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    Citations

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    Cited by:

    1. Valerie Cerra, 2022. "A Framework For Inclusive And Sustainable Growth In Asia And The Pacific," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 29(1), pages 17-41, May.
    2. Viana, Jr., Dante Baiardo C. & Lourenço, Isabel & Black, Ervin L. & Martins, Orleans Silva, 2023. "Macroeconomic instability, institutions, and earnings management: An analysis in developed and emerging market countries," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).

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