Washington Consensus

Summary

Washington consensus argued for an astructural approach focused on liberalization, privatization and stabilization of markets.

Assumptions

  • Government failure was crucial to failure of Keynesian Development Economics.
  • Rational Expectations.

Theory/Model

Rational expectations refuted government's structural role in monetary, fiscal and trade policy. Instead the focus was on the 'right price', stable market environments, strengthening institutions and building human capital.

Predictions

Evidence

  • Justin Yifu Lin argues that Washington Consensus, despite being promoted by mulitlateral institutions is 'at best controversial.'.

Evaluation