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Macroeconomic policy and the distribution of growth rates

  • Vatcharin Sirimaneetham
  • Jonathan Temple

    ()

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.

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File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp06584.pdf
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Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 06/584.

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Length: 51 pages
Date of creation: Mar 2006
Date of revision:
Handle: RePEc:bri:uobdis:06/584
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