Buiter, Willem H., Lago, Richard and Stern, Nicholas
Promoting an effective market economy in a changing world.
Centre for Economic Policy Research, London, UK.
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In this paper we examine the main challenges in promoting an effective market economy. While the paper ranges widely across the spectrum of economic institutions and policies, the central theme is the importance of macroeconomic stability for economic growth in the medium and long run. Macroeconomic stability may be seen as a public good. Its provision is among the essential responsibilities of the state both in modern market economies and in economies transforming themselves into modern market economies. Following this brief introduction, Section II considers four key aspects of the economic environment of the coming decades: increasing internationalization; market-orientation; diminished government role; and high real interest rates. Section III reviews the reasons why macroeconomic stability matters for economic performance and summarizes the key empirical evidence supporting the existence of a causal link. Section IV deals with the design of domestic and international policies and institutions to promote macroeconomic stability and Section V asks how national governments and international institutions can take advantage of the current relatively stable global macroeconomic environment to improve medium-term economic performance and promote long-term growth. Section VI concludes. While our discussion will range broadly, both theoretically and empirically, we shall emphasize lessons for, and experience from, countries attempting to create a market economy.
||© 1996 the authors
||macroeconomic stabilization; market institutions; political economy; transition economics
|Library of Congress subject classification:
||H Social Sciences > HC Economic History and Conditions
H Social Sciences > HB Economic Theory
J Political Science > JA Political science (General)
|Journal of Economic Literature Classification System:
||F - International Economics > F3 - International Finance > F31 - Foreign Exchange
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General
F - International Economics > F3 - International Finance > F33 - International Monetary Arrangements and Institutions
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
H - Public Economics > H1 - Structure and Scope of Government > H11 - Structure, Scope, and Performance of Government
H - Public Economics > H4 - Publicly Provided Goods > H40 - General
||Research centres and groups > Asia Research Centre
Collections > Economists Online
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Departments > Economics
||05 Jun 2008 11:21
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