Macroeconomic Institutions and Development

Bilin Neyapti, Associate Professor of Economics, Bilkent University, Turkey

The book incorporates the essential elements of institutional theory and highlights the issues pertaining to the measurement of institutional characteristics and the empirical analyses involving such measurement. It provides the theoretical framework of and empirical evidence on fiscal institutions, covering budgetary rules and procedures as well as fiscal decentralization, and reviews the theoretical framework for monetary institutions such as central bank independence, currency boards, monetary unions and inflation targeting in addition to providing empirical evidence on their effectiveness. The role of bank regulation and supervision is also investigated.

This path-breaking and original book will prove a fascinating read for a wide-ranging audience including academics, think tanks, international development agencies and policymakers within the fields of development, economics, heterodox economics and money, banking and finance.

‘The book illustrates that the combination of simple macroeconomic and microeconomic theory, simple game theoretic models, econometric techniques, and broader political economy analysis has the potential for analysing an important aspect of development, that is, how institutions affect and interact with development. It provides a useful review of some aspects of the literature on institutions and institutional change in development, drawing especially on the work of North and Olson, and presents some useful theoretical models and some interesting empirical results on the effects of particular macroeconomic institutions, such as currency boards, inflation targeting, and bank regulation and supervision.’
– Amitava Krishna Dutt, Economic Record

‘Bilin Neyapti provides a framework for understanding some of the most important issues confronting the world’s economy today. Viewing the government as a social planner charged with the task of delivering sustainable development as a public good, she examines features of global markets such as central bank independence, inflation targeting, monetary unions, and currency boards, in each case evaluating the capacity of the relevant institutions to deliver efficiency, equality, and stability over the long term. Neyapti’s broad-ranging and ambitious book should be of value to anyone interested in the development and improvement of the institutions undergirding the world’s financial system.’
– Geoffrey P. Miller, New York University Law School, US

‘Poor nations have learned the hard way that there is no greater threat to their economic development than macroeconomic crises. Avoiding macro instability in turn depends on good monetary and fiscal institutions. This book by Bilin Neyapti – part textbook, part treatise – is a terrific synthesis of the relevant literature and an excellent addition to it.’
– Dani Rodrik, Harvard University, US