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Research Department Strategy, Policy, and Review Department
Macroeconomic Research in Low-Income Countries
Advances Made in Five Key Areas Through a DFID-IMF Collaboration
Prepared by Hites Ahir, Mattia Coppo, Hendre Garbers, Giovanni Melina, Futoshi Narita (lead), D. Filiz Unsal (all RES), Vivian Malta, Xin Tang (both SPR), Daniel Gurara (AFR), Luis-Felipe Zanna (ICD), and Linda G. Venable (IMF Library) under the guidance of Kangni Kpodar (SPR) and Chris Papageorgiou (RES)
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Copyright ©2021 International Monetary Fund
Cataloging-in-Publication Data IMF Library
Names: Ahir, Hites. | Coppo, Mattia. | Garbers, Hendre. | Melina, Giovanni. | Narita, Futoshi. | Unsal, D. Filiz. | Malta, Vivian. | Tang, Xin (Economist). | Gurara, Daniel. | Zanna, Luis-Felipe. | Venable, Linda G. | Kpodar, Kangni. | Papageorgiou, Chris. |
International Monetary Fund. Research Department, issuing body. | International Monetary Fund. Strategy, Policy, and Review Department, issuing body. | International Monetary Fund, publisher.
Title: Macroeconomic research in low-income countries : advances made in five key areas through a DFID-IMF collaboration / Prepared by Hites Ahir, Mattia Coppo, Hendre Garbers, Giovanni Melina, Futoshi Narita (lead), D. Filiz Unsal (all RES), Vivian Malta, Xin Tang (both SPR), Daniel Gurara (AFR), Luis-Felipe Zanna (ICD), and Linda G. Venable (IMF Library) under the guidance of Kangni Kpodar (SPR) and Chris Papageorgiou (RES).
Other titles: Advances made in 5 key areas through a DFID-IMF collaboration. | International Monetary Fund. Research Department (Series). | International Monetary Fund. Strategy, Policy, and Review Department (Series).
Description: Washington, DC : International Monetary Fund, 2021. | Departmental paper series. | Includes bibliographical references.
Identifiers: ISBN 9781513566603 (paper)
Subjects: LCSH: Developing countries—Economic conditions—Research. | Monetary policy—Developing countries—Research. | Income distribution—Developing countries—Research. | Macroeconomics—Research.
Classification: LCC HC59.7 .M33 2021
Disclaimers and Acknowledgments
The research collaboration was funded by the former United Kingdom’s Department for International Development (UK DFID), which merged with the Foreign and Commonwealth Office (FCO) on September 2, 2020, to become the Foreign, Commonwealth and Development Office (FCDO). The collaboration project continues after the merger, funded by the FCDO.
While this document focuses on the research conducted under this collaboration, many papers and articles cited in this document are not necessarily conducted under this collaboration. See the project website for the list of the outputs under this collaboration.
The authors thank Carine Meyimdjui (SPR) for overall production support, Houda Berrada (COM) and her colleagues for design and editorial work, James Bonner (FCDO) for suggesting the idea to produce this paper, and Noémie Chomet (FCDO) and many other colleagues both at the FCDO and the IMF for their helpful and thoughtful comments during the review process. The authors are also grateful for the helpful guidance from Chris Papageorgiou (RES) and Kangni Kpodar (SPR), the strong support from Antonio Spilimbergo (RES) and Seán Nolan (SPR) on the production of this paper and the work under this research collaboration more generally, and to Andy Berg (ICD) and Cathy Pattillo (AFR) as well as DFID colleagues for having initiated this collaboration. The authors also thank the IMF Executive Director’s office for Africa Group 1 Constituency for the opportunity to present this paper and their insightful feedback. On Chapter 4, Tang is thankful to Stefania Fabrizio (SPR) and Marina Mendes Tavares (RES) for their support.
This research collaboration between the IMF and the former DFID (or now the FCDO) has been jointly managed by RES and SPR, in close collaboration with other IMF Departments.
The Departmental Paper Series presents research by IMF staff on issues of broad regional or cross-country interest. The views expressed in this paper are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, IMF management, or the FCDO.
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Contents
Overview, Impact, and Looking Forward
Hites Ahir (RES), Futoshi Narita (RES), and Linda G. Venable (IMF Library)
Macroeconomic Research Needs in Low-Income Countries
Impact Through Citation, Download, and Social Media
Looking Forward: COVID-19 and Beyond
1. Debt-Investment-Growth Nexus
Daniel Gurara (AFR), Giovanni Melina (RES), and Luis-Felipe Zanna (ICD)
The DIG and DIGNAR Models
Model Extensions
COVID-19 and Beyond
2. Monetary Policy in Low-Income Countries
Hendre Garbers (RES) and D. Filiz Unsal (RES)
Monetary Policy Practices in LICs
Gauging the Effectiveness and Effects of Monetary Policy in LICs
Developing Modern Macroeconomic Models to Look into Monetary Policy Issues in LICs
Advancing Model-Based Monetary Policy Analysis and Formulation in LICs
Effecting Change Through Country Applications and Uptake
Transforming the Engagement of the IMF with LICs
An Ongoing Agenda on Monetary Policy in LICs
3. Gender Issues
Vivian Malta (SPR)
Women and the Macroeconomy
Gender Budgeting
4. Income Inequality in Low-Income Countries
Xin Tang (SPR)
Persistent Income Inequality in LICs
Fiscal Reforms
Financial Sector Reforms
Globalization
Key Messages Going Forward
5. Diversification
Mattia Coppo (RES) and Giovanni Melina (RES)
Diversification and Macroeconomic Performance
Diversification Is at the Forefront of the Policy Debate
Successful Country Experiences
Analytical Work on Diversification at the IMF
References
Boxes
Box 1. Gender Gaps and Informality
Box 2. The Quantitative Macroeconomic Approach
Box 3. Revenue Mobilization and Inequality in Senegal
Box 4. Financial Reforms in Ethiopia and Myanmar
Tables
Table 1. Selected Pilot Studies of Fiscal Policy Reforms
Figures
Figure 1. Gap in Economic Policy Analysis
Figure 2. Growing Scholarly Citations
Figure 3. Country Applications of the DIG and DIGNAR Models in the Stock-Taking Analysis
Figure 4. Gender Gaps in Education and Income Level
Figure 5. Macroeconomic and Distributional Impacts of Domestic Revenue Mobilization: Case Studies
Figure 6. The Effect of Capital Account Liberalization on the Gini Coefficient
Figure 7. The Role of Financial Inclusion
Box Figure 3.1. Fiscal Reforms in Senegal
Box Figure 4.1. The Interaction between Financial Reforms and Fiscal Reforms