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Macroeconomic policy and the distribution of growth rates

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  • Vatcharin Sirimaneetham
  • Jonathan Temple

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Abstract

We examine the view that high-quality macroeconomic policy is a necessary, but not sufficient, condition for economic growth. We first construct a new index of the quality of macroeconomic policy. We then directly compare growth rate distributions across countries with good and bad policies; use Bayesian methods to examine the partial correlation between policy and growth; and outline how growth and steady-state income levels might have differed, had all countries achieved good policy outcomes. One finding is that bad macroeconomic policies can be offset by other factors, but the fastest-growing countries in our sample all shared high-quality macroeconomic management.

Suggested Citation

  • Vatcharin Sirimaneetham & Jonathan Temple, 2006. "Macroeconomic policy and the distribution of growth rates," Bristol Economics Discussion Papers 06/584, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:uobdis:06/584
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    Cited by:

    1. Rosa Bernardini Papalia & Silvia Bertarelli, 2013. "Nonlinearities in economic growth and club convergence," Empirical Economics, Springer, vol. 44(3), pages 1171-1202, June.
    2. Winford H. Masanjala & Chris Papageorgiou, 2008. "Rough and lonely road to prosperity: a reexamination of the sources of growth in Africa using Bayesian model averaging," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 671-682.
    3. Vatcharin Sirimaneetham, 2006. "Explaining policy volatility in developing countries," Bristol Economics Discussion Papers 06/583, Department of Economics, University of Bristol, UK.
    4. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09hc01napj8 is not listed on IDEAS
    5. Calderón, César & Fuentes, J. Rodrigo, 2012. "Removing the constraints for growth: Some guidelines," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 948-970.
    6. Ann Owen & Julio Videras & Lewis Davis, 2009. "Do all countries follow the same growth process?," Journal of Economic Growth, Springer, vol. 14(4), pages 265-286, December.
    7. Mauro Napoletano & Jean-Luc Gaffard, 2010. "Performances et politiques de croissance. Un éclairage empirique à partir d'une étude de l'effet de la taille des pays et nouvelles réflexions théoriques," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 213-248.
    8. Bos, J.W.B. & Economidou, C. & Koetter, M. & Kolari, J.W., 2010. "Do all countries grow alike?," Journal of Development Economics, Elsevier, vol. 91(1), pages 113-127, January.
    9. Mauro Napoletano & Jean-Luc Gaffard, 2009. "Country Size, Appropriate Policy, and Economic Performance: Some Evidence from OECD Countries," Documents de Travail de l'OFCE 2009-08, Observatoire Francais des Conjonctures Economiques (OFCE).
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    11. Derek D. Headey, 2008. "National policies and the sectoral pattern of economic growth," Agricultural Economics, International Association of Agricultural Economists, vol. 38(3), pages 287-299, May.
    12. Bittencourt, Manoel, 2012. "Inflation and economic growth in Latin America: Some panel time-series evidence," Economic Modelling, Elsevier, vol. 29(2), pages 333-340.
    13. Vatcharin Sirimaneetham, 2006. "What drives liberal policies in developing countries?," Bristol Economics Discussion Papers 06/587, Department of Economics, University of Bristol, UK.

    More about this item

    Keywords

    macroeconomic policy; economic growth; Washington Consensus; Bayesian Model Averaging; counterfactuals;

    JEL classification:

    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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