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Discussion Paper Details

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Title: Macroeconomic Policy and the Distribution of Growth Rates

Author(s): Vatcharin Sirimaneetham and Jonathan Temple

Publication Date: April 2006

Keyword(s): Bayesian Model Averaging, counterfactuals, economic growth, macroeconomic policy and Washington Consensus

Programme Area(s): International Macroeconomics

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.

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Bibliographic Reference

Sirimaneetham, V and Temple, J. 2006. 'Macroeconomic Policy and the Distribution of Growth Rates'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5642