Macroeconomic Approach Research Articles

A Macro-Economic Approach to Risk Management

A Macro-Economic Approach to Risk Management

Wage indexation: A macroeconomic approach

This essay examines the role of wage indexation in dampening macroeconomic fluctuations in a simple neoclassical model modified to incorporate short-term wage rigidities and uncertainty. The analysis departs from most of the previous literature on indexing in its explicit consideration of real disturbances. It is found that while indexing insulates the real sector from the effects of monetary shocks, it may exacerbate the real effects of real shocks. Thus the analysis suggests an optimal degree of partial indexation that depends on the underlying stochastic structure of the economy. Consequently, optimal indexing will not, in general, insulate the real sector from monetary variability.

Development Theory and the Multilateral Development Banks: An Assessment of the Effectiveness of Strategies Used in International Development Finance

Abstract. Although they are leading institutions in the world of modern development finance, the multilateral development banks have not been very explicit in outlining the development theories upon which they base their loan operations. This paper assesses the utility of the three prime theories employed by these institutions: the project approach, the macroeconomic (gap theory) approach, and the social welfare (or income distribution) approach. It indicates the questions to which each approach addresses itself, and it indicates weaknesses and theoretical inadequacies of each as a primary or sole development tool. Only a balanced and careful use of all these sometimes contradictory approaches will permit the multilateral lending institutions to fulfill their multifaceted obligations.

Comments

As Richard L. Rudolph correctly observes at the beginning of his article, Austrian economic history has not been adequately examined in international, comparative studies of the problems of economic growth. Undoubtedly this is attributable both to the traditional orientation of Austrian historians toward national and regional studies and to the interest of so many historians in various aspects of the preindustrial age. Macroeconomic approaches have, therefore, been deemphasized, even though they have led to significant new conclusions in regard to the nature of preindustrial economy and society, partly because of the difficulty in applying this methodology to an analysis of the increasingly complex affairs of a modern industrial society.

External Debt and Economic Development: Some Empirical Tests of Macroeconomic Approaches

The question of the optimum net inflow of foreign resources required by a developing country has occupied a prominent place in economic literature during the past few years-deservedly so, of course, since it is a question of obvious practical interest. The questions of the amount of gross foreign borrowing which must take place and the levels to which external indebtedness must rise in order to obtain the desired net resource inflow have been much less fully explored, although they can hardly be said to be of a lesser degree of practical importance. The seminal contribution to a better