Macroeconomic Stability and Inclusive Growth

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

March 19, 2021

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Format: Chicago

Hamid R Davoodi, Peter J Montiel, and Anna Ter-Martirosyan. Macroeconomic Stability and Inclusive Growth, (USA: International Monetary Fund, 2021) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Economic sectors, Financial crises, Fiscal consolidation, Fiscal policy, Income, Income distribution, Income inequality, National accounts

Keywords: Caribbean, Consumption inequality, Fiscal consolidation, Global, Heterogeneous agents, Inclusive growth, Income, Income distribution, Income inequality, Income loss, Inequality, Inequality result, Macroeconomic policy, Macroeconomic volatility, Poverty, Unemployment, Wealth inequality

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/081
Stock No:

WPIEA2021081
ISBN:

9781513574363
ISSN:

1018-5941

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