The Macro Content of Prsps: Assessing the Need for a More Flexible Macroeconomic Policy Framework

24 Pages Posted: 6 Jul 2005

See all articles by Ricardo Gottschalk

Ricardo Gottschalk

University of Sussex; Institute of Development Studies

Abstract

This article analyses the content of 15 Poverty Reduction Strategy Papers from a growth and poverty reduction perspective. Contrary to new trends in developed and middle-income countries, their policy frameworks lack the necessary flexibility to deal with external shocks and address macroeconomic volatility appropriately. Their fiscal and monetary policies are too narrowly focused on fiscal balance and price stability and consequently pay too little attention to economic fluctuations arising from external shocks, which have major effects on poverty and growth. To address these issues, the article proposes a set of policy measures, including avoidance of excessively tight inflation and fiscal targets (with provisions for fluctuations in commodity prices), more room for countercyclical policy and the adoption of permanent safety nets.

Suggested Citation

Gottschalk, Ricardo, The Macro Content of Prsps: Assessing the Need for a More Flexible Macroeconomic Policy Framework. Development Policy Review, Vol. 23, No. 4, pp. 419-442, July 2005, Available at SSRN: https://ssrn.com/abstract=747784

Ricardo Gottschalk (Contact Author)

University of Sussex ( email )

Sussex House
Falmer
Brighton, Sussex BNI 9RH
United Kingdom

Institute of Development Studies ( email )

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