Towards Poverty Reducing Macroeconomic Policies - Strategy Paper

Abstract

There are substantial disagreements on the impact of macroeconomic policies on poverty. While past criticism of stabilization and adjustment programs have led to considerable changes in program implementation and program content, heated debates on the impact of macroeconomic policies on poverty continue to be at the center of the development debate. The debate so far has not only shown how little agreement there is on the impact of macroeconomic policies on poverty, it has also shown that there are considerable disputes on how to assess the impact of macroeconomic policies on poverty. With more and more data available, the binding constraint for a thorough analysis is more and more related to the lack of agreed standards, methodologies, and tools to assess the impact of macroeconomic policies on poverty. There are a variety of promising initiatives ongoing that develop quantitative tools that can be used to assess the impact of macroeconomic policies on poverty, especially within (a) the Network analyzing the Micro Impact of Macroeconomic and Adjustment Policies (MIMAP); (b) the World Bank; and (c) the International Food Policy Research Institute (IFPRI). Yet, these initiatives would benefit from closer coordination and cross-fertilization. Furthermore, more efforts are needed to overcome the limitations of currently existing computable general equilibrium (CGE) models and to consider alternative as well as complementary methodologies to CGE models to assess the impact of macroeconomic policies on poverty. In any case, it would be desired if some structured collaboration on such issues could be initiated among researchers around the globe in NGOs, think tanks, and many national and international development organizations, like the Bretton Woods Institutions, the Organisation for Economic Co-operation and Development (OECD), and a variety of United Nations organizations.