ABSTRACT
Barbara Stallings’ paper attacks conventional macroeconomic policies on many fronts and is particularly critical of the “sound economic policies” that she associates specifically with the International Monetary Fund (IMF). She argues that such “conventional” policies fail to take into account the root causes of macroeconomic disequilibria, and only suppress the symptoms of more fundamental problems without providing a lasting cure. Stallings criticizes the IMF for advocating and promoting trade and payments liberalization; for emphasizing private enterprise and foreign capital and for stressing an open economy and export promotion. Stallings argues in several places that inflation and balance of payments deficits are structural problems which can be suppressed but not solved by conventional macroeconomic policies. In many developing countries, stabilization requires reduction or elimination of government budget deficits, and thus either an increase in taxes or a reduction in expenditures or transfer payments-all of which are likely to be met with strong protest by affected groups.
