Macroeconomic policies, instability and growth in the world

High instability and low growth characterise the: macroeconomic performance of most developing countries. Inadequate policies are often to blame. This paper documents the empirical regularities that characterise the relations hips among macroeconomic/financial policies, instability and growth across developing and industrial nations. While successful transitions to low inst ability and high growth are not frequent, they have been observed in a doze n countries. Such win-win transitions require that institutions and rules b e put in place to change government incentives for choosing between policie s that reflect narrow interests or social conflict - contributing to more i nstability and less growth - and social welfare maximising policies that he lp growth and make economies more resilient to residual instability.