Macroeconomic policy enhancement and challenges for promoting growth with equality

The main macroeconomic policies implemented over the past three decades are outlined below, highlighting how they have been enhanced over time. In the case of fiscal policy, the discussion centres on how this enhancement contributed to growth in relation to public debt, countercyclical action, social spending and public investment. For monetary and exchange-rate policy, the focus is on the policy contribution to nominal stability (inflation and interest rate reduction) and the enhancement that comes with institutional changes and flexible exchange-rate management; these changes helped to broaden the scope for monetary policy to play a countercyclical role during the global financial crisis of 2008-2009. This chapter also looks at the build-up of international reserves as the monetary authorities responded to growing international financial volatility. The closing section proposes orienting macroeconomic policy so that (while leveraging and maintaining its strengths in an institutional framework that ensures public policy coordination and cooperation with social actors) it encourages investment, especially in the tradable sectors (the ones that produce goods and services that are exported or compete with imports) that generate linkages, thus fostering structural change to further sustainable growth with equality.

Related Subject(s): Economic and Social Development