Macroeconomics for Developing Countries

Macroeconomics for Developing Countries

Macroeconomics for Developing Countries

Macroeconomics for Developing Countries


This updated edition has been comprehensively revised to develop the themes contained in the first edition, taking into account the changes that have occurred in the global economy since the turn of the millennium.


The first edition of this book was published in 1994. The enthusiastic response it received and the momentous developments in the global economy since then prompted me to write this second edition.

An abiding concern of the previous edition was that there was a need to examine a variety of models in order to understand the macroeconomic performance of developing countries. Developing countries are at different stages of development and it would be simplistic to assume that one model suits all of them. Without much risk of oversimplification one can state that there is far more homogeneity in the macroeconomic structures of developed countries. Yet there is disagreement on the macroeconomic model to be used even in their case. It would seem natural then to conceive of alternative models for developing countries.

This new edition takes this theme further. Apart from the versions of the structuralist models discussed in the first edition, the present edition also carries a fuller evaluation of the Washington consensus model (the IMF version) since the magnitude of the point of departure of the alternative models cannot be fully appreciated without a study of the dominant model. This new edition contains an exhaustive evaluation of IMF stabilisation programmes. In order to contrast this group of models with standard neoclassical doctrine as well as to build bridges with it, this new edition has a self-contained examination of both closed and open economy ‘standard’ models.

The study of economic growth and monetary policy assignment has undergone important changes since the previous edition. Some of these important changes are reflected in this edition. There are separate chapters on economic growth as well as on inflation and monetary policy. These include discussions on ‘new’ theories of economic growth and the determinants of growth as well as issues of seignorage, credibility of monetary policy and inflation targeting. In view of the continued, even enhanced, emphasis on financial sector reforms, the links between financial liberalisation and economic growth are examined. In view of the recent emphasis on sustainability of internal and external debt of developing countries, there is a chapter . . .

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