The Role of Macroeconomic Factors in Growth
AbstractUsing a regression analog of growth accounting, I present cross- sectional and panel regressions showing that growth is negatively associated with inflation, large budget deficits, and distorted foreign exchange markets. Supplementary evidence suggests that the causation runs from macroeconomic policy to growth. The framework makes it possible to identify the channels of these effects: inflation reduces growth by reducing investment and productivity growth; budget deficits also reduce both capital accumulation and productivity growth. Examination of exceptional cases shows that while low inflation and small deficits are not necessary for high growth even over long periods, high inflation is not consistent with sustained growth.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4565.
Date of creation: Dec 1993
Date of revision:
Publication status: Published as "Economic Reform in the USSR and the Role of Aid", BP, Vol.22,no. 2 (1991): 289-302. Published as "The Role of Macroeconomic Factors in Growth", Journal of Monetary Economics, Vol. 32,no. 3 (1993): 485-512.
Note: EFG ME
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Other versions of this item:
- E00 - Macroeconomics and Monetary Economics - - General - - - General
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
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