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Macroeconomic Policies, Instability, and Growth in the Wo

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  • Ibrahim Elbadawi
  • Klaus Schmidt-Hebbel

Abstract

High instability and low growth characterize the macroeconomic performance of most developing countries. Inadequate policies are often to blame. This paper documents the empirical regularities that characterize the relationship between macroeconomic-financial policies, instability, and growth across developing and industrial nations. While successful transitions to low instability and high growth are not frequent, they have been observed in a dozen of countries. Such win-win transitions require to put into place institutions and rules that change government incentives in choosing between policies that reflect narrow interests or social conflict -- contributing to more instability and less growth -- and social welfare-maximizing policies that help growth and make economies more resilient to residual instability.

Suggested Citation

  • Ibrahim Elbadawi & Klaus Schmidt-Hebbel, 1998. "Macroeconomic Policies, Instability, and Growth in the Wo," Working Papers Central Bank of Chile 43, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:43
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_43.pdf
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    References listed on IDEAS

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    Cited by:

    1. Vatcharin Sirimaneetham, 2006. "Explaining policy volatility in developing countries," Bristol Economics Discussion Papers 06/583, School of Economics, University of Bristol, UK.
    2. Constantino J. Gode, 2001. "Sovereign Debt and Uncertainty in the Mozambican Economy," WIDER Working Paper Series DP2001-130, World Institute for Development Economic Research (UNU-WIDER).

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