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Macroeconomics in develpoing countries

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  • Deepak Nayyar

    (Jawaharlal Nehru University, School of Social Sciences, Centre for Economic Studies and Planning, New Delhi (India))

Abstract

This essay analyzes the differences between the economies of industrialized countriesand developing countries, which have important implications for macroeconomics in terms of theory and policy. It considers the differences in macroeconomic objectives and examines why the reach of macroeconomic policies is different in the two sets ofcountries. It argues that the distinction between short-run macroeconomic models and long-term growth models is not quite appropriate for developing countries, where macroeconomic constraints on growth straddle time horizons and short-term policies have long-term consequences. The essential hypothesis is that the nature of relationships and the direction of causation in macroeconomics, which shape analysis, diagnosis and prescription, depend on the institutional setting and not the analytical structure of models. And even if some laws of economics are universal, the functioning of economies can be markedly different. Therefore, economic theory and policy analysis should recognize, rather than ignore, such myriad differences.

Suggested Citation

  • Deepak Nayyar, 2007. "Macroeconomics in develpoing countries," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(242), pages 249-269.
    • Handle: RePEc:psl:bnlqrr:2007:32
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9888/9770
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    References listed on IDEAS

    as
    1. José Antonio Ocampo, 2003. "Developing countries' anti-cyclical policies in a globalized world," Chapters, in: Amitava Krishna Dutt (ed.), Development Economics and Structuralist Macroeconomics, chapter 19, Edward Elgar Publishing.
    2. Dornbusch, Rudiger, 1987. "Exchange Rate Economics: 1986," Economic Journal, Royal Economic Society, vol. 97(385), pages 1-18, March.
    3. Bacha, Edmar L., 1990. "A three-gap model of foreign transfers and the GDP growth rate in developing countries," Journal of Development Economics, Elsevier, vol. 32(2), pages 279-296, April.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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