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Macroeconomics and Governance

Author

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  • Gordon de Brouwer

    (Treasury, Government of Australia)

Abstract

In recent years there has been a resurgence of interest in the impact of institutions on economic growth and development. Governance, both at the economy-wide and firm-specific level, has emerged as one of the central aspects of institutional structure and design. The paper argues that the quality of governance matters to macroeconomic performance because it provides a key foundation for the equitable and efficient allocation of resources, including capital. Better governance tends to be associated with deeper economic and financial development, with the causation running from better governance to higher income rather than the other way round. Better governance also reduces the risk of macroeconomic instability, by containing the types of shocks to which an economy is exposed and by making it easier for private and official decision-makers to deal with negative shocks when they occur. This matters for all economies, be they developing, emerging, transition, or industrialised. This paper sets out some definitions of governance, at both the economy-wide and firm-specific level, and explores what is meant by 'good governance'. It sets out some indicators of governance for selected Asia-Pacific economies. It explores some of the ways that governance can matter for macroeconomic growth, development and stability.

Suggested Citation

  • Gordon de Brouwer, 2003. "Macroeconomics and Governance," Treasury Working Papers 2003-04, The Treasury, Australian Government, revised Dec 2003.
    • Handle: RePEc:tsy:wpaper:wpaper_tsy_wp_2003_4
    as

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    File URL: http://archive.treasury.gov.au/documents/773/PDF/Macroeconomics%20and%20Governance.pdf
    File Function: First version, 2003
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    References listed on IDEAS

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    Cited by:

    1. Mohd Nor Zamry, Nur Syafinaz, 2019. "Corporate Governance and Its Determinants: A Study on Wells Fargo Scandal," MPRA Paper 93726, University Library of Munich, Germany.

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    More about this item

    Keywords

    governance; institutions; economic development; macroeconomic stability; East Asia;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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