ABSTRACT
The inspiration for this book on modelling macroeconomic adjustment in developing economies (DEs) was originally prompted by the introduction of the stabilisation and structural adjustment policies in India in 1991. In this context the policy package applied to India as to many other DEs by the International Monetary Fund (henceforth the Fund) and the World Bank (henceforth the Bank) has received considerable attention in recent years. The onset of the continuing external and internal imbalances has contributed to a slowdown in growth, high inflation and balance of payments (BOP) difficulties, which has forced the Fund into a leading role in resolving the crisis. This adjustment involves both some finance and a set of conditionalities or policies. Though there has been debate about the appropriate role of the Fund, there has been little analysis of the underlying analytical model, which the Fund purports to use. So in this study we start off with the analytical framework for macroeconomic adjustment policy currently underway in many DEs and attempt at a comprehensive critical analysis of the Fund-Bank approach on development.
