Macroeconomic Policies for Emerging and Developing Economies

About the Book

The global financial crisis has proved that economic realities are very different from the traditional assumptions of macroeconomics. Macroeconomic Policies for Emerging and Developing Economies provides a contemporary analytical account and discusses the current debates on the theory and practices of macroeconomic policies of developing economies emerging from the crisis. It deals with issues relating to openness, capital flows and exchange rate policies as well as macro-financial policies. It underscores two important points: the need to design a development strategy that takes into account the economic context of the countries concerned, and for well-regulated macro-financial policies that would help promote the objects of sustainable growth with price and financial stability. This engaging and unrivalled guide to macroeconomic policy goes beyond the standard macroeconomists’ tool kit of monetary, fiscal and exchange rate policies and includes topics such as development strategies and macro-financial policies.

Table of Contents:
Foreword by Y. V. Reddy Preface—The Nectar The Starters Development Strategy: The Fountainhead of Macroeconomic Policies Fiscal Policy: No Longer the Big Brother Monetary Policy: The Black Box of Complexities Exchange Rate and Openness: The World Is One! Financial Stability: A Belated Recognition of the ′Core′ The Desserts Notes and References Index

About the Author :
A. Vasudevan  is an economist who has occupied various senior advisory positions in central banks both in India and abroad. He had a long stint in the RBI and retired as an Executive Director of the RBI in 2000. He was also Adviser to the Executive Director for India at the IMF, Washington DC, during 1984–1989. During 2012–2016, he was Special Adviser to the Governor, Central Bank of Nigeria; prior to it, during 2006–2009, he was Monetary Operations Adviser on IMF assignment in Nigeria. He was also Visiting Professor (UGC) at Gokhale Institute of Politics & Economics, Pune, in 2004. He has published extensively on Development Economics and Monetary Policy. His recent publications include Central Banking for Emerging Market Economies (2nd edition 2013) and Monetary Governance (2010). Partha Ray is currently Professor of Economics at the Indian Institute of Management, Calcutta. During 2007–2011, he was Adviser to the Executive Director (India) at the IMF, Washington DC. Earlier he was working in the specialist cadre of Economists in RBI’s Economic Research Department during 1989–2006 in various capacities; his last position was Director, Department of Economic and Policy Research, RBI. During 1985–1989, he taught Economics for four years in Calcutta. He has written extensively on issues relating to monetary policy, banking and finance. His recent publications include: Financial and Fiscal Policies: Crises and New Reality (jointly with Y. V. Reddy and Narayan Valluri, 2015), Monetary Policy (2013) and The Global Economic Crisis Through an Indian Looking Glass (jointly with Adarsh Kishore and M. D. Patra; SAGE, 2011).

Review :
In this book, two highly eminent scholars and former central bankers, Dr A. Vasudevan and Dr Partha Ray, with very rich and prolonged experience in the analysis and formulation of the various dimensions of macroeconomic policy in India and elsewhere, attempt a truly credible and readable narrative of fiscal, monetary and exchange rate policies for financial stability in emerging developing economies. The specific context for their analysis is the Global Financial Crisis of 2007–2008, and its aftermath, and they paid particular attention to the development strategy, political economy and institutions of the economy in question. The authors opine that in spite of voluminous literature on the subject, the profession’s understanding of the solution to such crisis is quite incomplete. The book is a veritable gold mine not only for postgraduate students and teachers of macroeconomics but also for policy makers and analysts. The unique feature of combining the analysis of economic and financial aspects, without resort to ‘mathiness’ and avoidance of jargon, entitles the two authors for handsome compliments of the economics profession. The crumbling of the modern macroeconomics consensus after the global financial crisis has opened up space for creative rethinking about macroeconomic policy. This book by A. Vasudevan and Partha Ray is a part of that process. It deserves to be read by all those who are interested in the craft of policymaking—professional economists, policy makers, economics students and journalists. Macroeconomic Policies for Emerging and Developing Economies has a rare combination of scholarly depth with the contextual nuances of policymaking. This book not only deals with the challenges of fiscal, monetary, exchange rate and financial stability policies but also re-establishes their forgotten link to national development strategies. It also transcends the usual binary distinction between positive economics and normative economics—and embraces what John Neville Keynes called the art of economics. A must read. This unusual and stylistically interesting book is rooted not only in the authors’ rich global experience but also in reality. It stays true to their aim ‘essentially to lay bare the processes, institutions and analytical underpinnings of macroeconomic policies’. But it goes well beyond that target. They view macroeconomics as much more than the theoretical constructs of academics or bureaucrats who serve to formulate economic policy in an increasingly turbulent world. Their inspiration comes from the Bengali addas or ‘salons’ that produce lively exchanges and penetrating commentary to arrive at a better understanding of issues under debate. Against this epistemic background, they relate efforts of rapidly emerging economies, such as India, to face up to the economic challenges of today’s interconnected world. But the economy is more than economics. It also encompasses finance and behavioural sciences and takes into account people and their unfathomable behaviour, as well as the politicians’ search for measures that would improve general welfare and ensure the longevity of political leaders themselves. The real world experience of the authors makes this a valuable addition to the literature. Let us hope political leaders will make the time to read and profit from its trenchant analyses.