Macroeconomic Stability and Inclusive Growth

20.500.12592/b8zfsj

Macroeconomic Stability and Inclusive Growth

19 Mar 2021

We survey the literature on the relationship between macroeconomic stability and inclusive growth and identify gaps in our knowledge. We examine the role of macroeconomic policies (fiscal, monetary, macroprudential, and exchange rate) and measures of inclusiveness (income inequality, consumption inequality, wealth inequality, poverty, and unemployment) across countries at different income levels. Avoiding procyclical macroeconomic policies and mitigating macroeconomic volatility should be on the agenda of all policymakers concerned with promoting inclusive growth. The emerging theory and evidence suggest a strong role for macroeconomic policies in shaping inclusive growth, both in the short-run and the long-run. The two-way relationship between the macroeconomy and inequality underscores the challenge of identifying and estimating causal relationships. Models with heterogeneous agents have much to offer in this area.

Authors

Hamid R Davoodi, Peter J Montiel, Anna Ter-Martirosyan

Format
Paper
Frequency
regular
ISBN
9781513574363
ISSN
1018-5941
Pages
36
Published in
United States of America
Series
Working Paper No. 2021/081
StockNumber
WPIEA2021081