Macroeconomic Policy and the Distribution of Growth Rates

Jonathan Temple and Vatcharin Sirimaneetham

No 5642, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Macroeconomic policy; Economic growth; Washington consensus; Bayesian model averaging; Counterfactuals (search for similar items in EconPapers)
JEL-codes: O23 O40 (search for similar items in EconPapers)
Date: 2006-04
New Economics Papers: this item is included in nep-dev and nep-mac
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Citations: View citations in EconPapers (21)

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Working Paper: Macroeconomic policy and the distribution of growth rates (2006)
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