Stabilization, Liberalization, and Growth

Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis and Deepak Nayyar

in Stability with Growth

Published in print August 2006 | ISBN: 9780199288144
Published online September 2006 | e-ISBN: 9780191603884 | DOI:

Series: Initiative for Policy Dialogue Series

 Stabilization, Liberalization, and Growth

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This chapter concludes the book by reviewing some of the key links between stabilization, liberalization, and growth. The first section reviews why instability is bad for the growth of the economy. The second reviews the argument that an excessive focus on price stability, as opposed to stability of output or employment, can be bad for growth. The third argues that excess reliance on monetary policy as a tool for stabilization may be bad for long-run economic growth, and examines the long-run consequences of failing to maintain the economy at as close to full employment as possible. The fourth and final section brings together the various strands of argument put forward in this book by first looking at the issues of liberalization and macroeconomic policy through the lens of risk management, and then discussing the links between stabilization and liberalization, and between growth and poverty.

Keywords: price stability; employment; monetary policy; risk management; poverty; inflation; instability

Chapter.  5390 words. 

Subjects: Economic Development and Growth

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