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Macroeconomic stability in developing countries - How much is enough?

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  • Montiel, Peter
  • Serven, Luis

Abstract

In the 1990s macroeconomic policies improved in a majority of developing countries, but the growth dividend from such improvement fell short of expectations, and a policy agenda focused on stability turned out to be associated with a multiplicity of financial crises. The authors take a retrospective look at the content and implementation of the macroeconomic reform agenda of the 1990s. They review the progress achieved with fiscal, monetary, and exchange rate policies across the developing world, and the effectiveness of the changing policy framework in promoting stability and growth. The main lesson is that slow growth and frequent crises resulted, more often than not, from shortcomings in the reform agenda of the 1990s. These shortcomings essentially concern the depth and breadth of the macroeconomic reform agenda, its attention to macroeconomic vulnerabilities, and the complementary reforms outside the macroeconomic sphere.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3456.

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Date of creation: 01 Nov 2004
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Handle: RePEc:wbk:wbrwps:3456

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Keywords: Fiscal&Monetary Policy; Payment Systems&Infrastructure; Banks&Banking Reform; Economic Theory&Research; Environmental Economics&Policies; Macroeconomic Management; Economic Theory&Research; Achieving Shared Growth; Environmental Economics&Policies; Inequality;

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Citations

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Cited by:
  1. Ondřej Šimpach & Jitka Langhamrová, 2013. "Forecasting Future Salaries in the Czech Republic Using Stochastic Modelling," Business Systems Research, Society for Promotion of Business Information Technology (BIT), vol. 4(2), pages 4-16.
  2. Francis X. Diebold & Kamil Yılmaz, 2007. "Macroeconomic Volatility and Stock Market Volatility,World-Wide," Koç University-TUSIAD Economic Research Forum Working Papers 0711, Koc University-TUSIAD Economic Research Forum.
  3. Abbott, Philip & Andersen, Thomas Barnebeck & Tarp, Finn, 2010. "IMF and economic reform in developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(1), pages 17-26, February.
  4. Demir, FIrat, 2009. "Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets," Journal of Development Economics, Elsevier, vol. 88(2), pages 314-324, March.
  5. Sanogo, Issa & Gyengani, Zakaria, 2008. "Private investment in guinea, does macro-instability matter? A comparative analysis," MPRA Paper 11606, University Library of Munich, Germany.
  6. Demir, Firat, 2007. "Private Investment, Portfolio Choice and Financialization of Real Sectors in Emerging Markets," MPRA Paper 3835, University Library of Munich, Germany, revised Jul 2007.
  7. DemIr, FIrat, 2009. "Capital Market Imperfections and Financialization of Real Sectors in Emerging Markets: Private Investment and Cash Flow Relationship Revisited," World Development, Elsevier, vol. 37(5), pages 953-964, May.

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