Edward Elgar Publishing Open-Economy Macroeconomics for Developing Countries

Open-Economy Macroeconomics for Developing Countries focuses on fiscal, monetary and exchange rate issues of importance to less developed economies. The book argues that the dichotomy between the short-term macroeconomic stabilization goal and the long-term economic growth objective commonly found in developing countries' policy framework is inappropriate. The authors report empirical evidence to support the proposition that macroeconomic stability is a pre-requisite for sustained economic growth and the root of macroeconomic instability in developing countries lies in the government budget deficits. The book discusses the stabilization tools available to deal with capital flows, supply shocks and the effects of financial deregulation. It opens with a discussion of macroeconomic policy problems for open developing economies and an historical overview of the international institutions such as IMF, GATT and UNCTAD. The authors then provide a comprehensive review of macroeconomic models which are popularly used to analyse policy dilemmas related to internal and external balances of open economies. Having reviewed the institutional and theoretical framework, the authors assess the macroeconomic impact of financial deregulation, capital flows and foreign investment. They address the debt crisis, financial instability, capital flight, currency substitution and exchange rate arrangements. The authors also consider more general issues such as the political economy of macroeconomic management and the institutional framework that may enhance credibility and effectiveness of macroeconomic policy. In conclusion, they stress that the openness of an economy itself acts as a constraint on macroeconomic mismanagement and hence may enhance economic growth. This comprehensive book will be an important addition to the literature, and will be of use to advanced undergraduates and graduates of development economics, development studies and financial and monetary economics. Review 'The teaching of macroeconomics has had to change in recent years to take account of the ever-increasing integration of the world economy, with countries more open to foreign investment and capital flows, and vulnerable to exchange rate movements and capital flight. Hossain and Chowdhury have written an exciting new macro-text for the 21st century reflecting these issues, which will be invaluable to teachers and students world-wide.''The book by Hossain and Chowdhury deals with an important subject, namely the adjustment and policy problems faced by developing countries in the fiscal, monetary and macroeconomic sectors in a global economy. The authors explain in a straightforward and balanced way the opportunities, particularly for smaller developing countries, arising from increasing interdependence with global markets, as well as their vulnerability with regard to external shocks and volatility of capital flows. This is done with a minimum use of highly technical mathematics so that this book should be highly accessible to students and the general reader. The book fills a definite gap in the development literature - to the best of my knowledge nothing serving quite the same purpose exists at the moment.' -- H.W. Singer, University of Sussex, UK About the Author Akhand Akhtar Hossain, Associate Professor of Economics, The University of Newcastle, Australia and Anis Chowdhury, formerly Professor of Economics, School of Economics and Finance, University of Western Sydney, Australia and Managing Editor, Journal of the Asia Pacific Economy