TY  - JOUR
AU  - Fischer,Stanley
TI  - Growth, Macroeconomics, and Development
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3702
PY  - 1991
Y2  - May 1991
UR  - http://www.nber.org/papers/w3702
L1  - http://www.nber.org/papers/w3702.pdf
N1  - Author contact info:
Stanley Fischer
Governor
Bank of Israel
One Kaplan Street
Jerusalem 91007
ISRAEL
Tel: 9722-655-2701
Fax: 9722-652-8419
E-Mail: sfischer@bankisrael.gov.il
M1  - published as Stanley Fischer. "Growth, Macroeconomics, and Development," in Olivier Jean Blanchard and Stanley Fischer, editors, "NBER Macroeconomics Annual 1991, Volume 6" MIT Press (1991)

AB  - The 1980s were both the lost decade of growth for much of Latin America and Africa, and the period in which -- through the new growth theory -- macroeconomists returned to the study of growth and development. The new growth theory is production function driven and concerned primarily with steady states, and has paid little attention to the role of macroeconomic policy -- as reflected for instance in the rate of inflation and the budget deficit -- in determining growth. This paper presents a variety of evidence that macroeconomic policies matter for long-run growth. First, macroeconomic variables enter the typical new growth theory cross-country regressions with statistical significance and the expected signs. Second, evidence from large multi?country case studies, and from case-studies of Chile and Cote d'Ivoire presented in the paper, shows that macroeconomic policy choices have had a significant impact on growth over periods of more than a decade. The conclusion is that macroeconomic policy choices, including the budget deficit, the exchange rate system, and those choices that determine the inflation rate, matter for long-term economic growth.
ER  -