Macroeconomic "fundamentals"are a most relevant variable for economic development.However, there is wide misunderstanding about which are the"sound macroeconomic fundamentals," contributingto sustained economic growth. The approach in fashion in themainstream world and international finance institutions(IFIs) emphasizes macroeconomic balances of two pillars: lowinflation and fiscal balances. The author calls itfinancieristic macroeconomic balances. Additionally, afrequent assertion in the conventional literature is that anopen capital account contributes to impose macroeconomicdiscipline in emerging economies (EEs). There is strongevidence that financieristic balances have not provided amacroeconomic environment contributing to sustained growth.A third pillar must be added, linked to the productive sideof the economy. The behavior of aggregate demand, at levelsconsistent with potential gross domestic product (GDP), is acrucial part of a third pillar for real macroeconomicbalances, which has frequently failed in neoliberalexperiences. Similarly crucial parts are well-alignedmacro-prices, like interest and exchange rates. Frequently,these prices and aggregate demand have behaved as outliers,as reflected in economies working either well belowpotential GDP (the most frequent result), or overheated,with a booming aggregate demand and a large externaldeficit. This paper analyses alternative macroeconomicenvironments faced by firms and workers in the productiveside of the economy (the producers of GDP), and theinterrelationship between financial and real variables. Theauthor analyzes alternative structural countercyclicalfiscal policies, intermediate exchange rate policies, andcapital account approaches.
PDF
download
878987797
028-85220240
