## Macro-Structural Policies and Income Inequality in Low-Income Developing Countries

_Staff Discussion Notes, January 26, 2017_

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## Bibliographic details
- Authors: Stefania Fabrizio, Davide Furceri, Rodrigo Garcia-Verdu, Grace B Li, Sandra Lizarazo, Marina Mendes Tavares, Futoshi Narita
- Published: January 26, 2017
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781475566222.006

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### Overview and context
- Authors: Stefania Fabrizio, Davide Furceri, Rodrigo Garcia-Verdu, Grace B Li, Sandra Valentina Lizarazo, Marina Mendes Tavares, Futoshi Narita
- Publication date: January 26, 2017
- Series: Staff Discussion Notes No. 2017/001, Issue 001, Volume 2017, Pages: 42
- DOI: https://doi.org/10.5089/9781475566222.006
- ISBN: 9781475566222
- ISSN: 2617-6750

### Key findings
- Despite sustained economic growth and rapid poverty reductions, income inequality remains stubbornly high in many low-income developing countries.
- High levels of inequality can impair the sustainability of growth and macroeconomic stability, and can limit countries’ ability to reach the Sustainable Development Goals.
- Macro-structural policies aimed at raising growth payoffs in low-income developing countries can have important distributional consequences.
- The impact of such policies on income inequality depends on both:
  - the design of the reforms, and
  - country-specific economic characteristics.
- There is no one-size-fits-all recipe for ensuring that growth-promoting macro-structural reforms are distributionally neutral or progressive.

### Analytical approach
- The note uses empirical and modeling techniques to assess distributional consequences of macro-structural policies in low-income developing countries.

### Policy implications and recommendations
- Governments can address adverse distributional consequences of pro-growth reforms by designing reform packages that make pro-growth policies also more inclusive.
- Policy design should account for country-specific economic characteristics to mitigate negative distributional outcomes.

### Subjects and keywords (as listed in the source)
- Subjects: Agricultural sector, Economic sectors, Income, Income distribution, Income inequality, National accounts, Taxes, Value-added tax
- Keywords: Agricultural sector, agriculture, Caribbean, cash transfer program, cost of capital, financial inclusion, financial sector reform, growth, higher-productivity sector, Income, Income distribution, income fluctuation, Income inequality, inequality in low-income developing countries, infrastructure investment, macro-structural policies, productivity, productivity gap, rate, resource mobilization, revenue, SDN, Value-added tax

*Staff Discussion Note: Macro-Structural Policies and Income Inequality in Low-Income Developing Countries (Staff Discussion Notes 2017, 001).*

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_Source: https://www.imf.org/en/publications/staff-discussion-notes/issues/2017/01/26/macro-structural-policies-and-income-inequality-in-low-income-developing-countries-44526_