Review of the Washington Consensus: New/old paradigm of macroeconomic policy

Abstract

In the paper, the authors deal with the issue of the Washington Consensus as a model of macroeconomic policy for overcoming the crisis of a debt and transitional nature. The institutionally based approach, accepted by the most credible individuals and organizations on the global level, has become a generally accepted concept and paradigm of the bearer of macroeconomic power. Until the end of the 20th century, Williamson's concept of macroeconomic stabilization was the only one, when Stiglitz formulated a new paradigm for development based on it. The basis of the new/old paradigm of marco-economic policy lies in macroeconomic discipline, advocating a market economy and the openness of the national economy to the world. The Washington Consensus is actually a set of 10 rules that are applied in the process of solving crisis economic situations. Applying Williamson's concept of macroeconomic stabilization, the practice of transitioning certain central-planned systems into market ones showed certain shortcomings, on the basis of which proponents and critics tried to adapt the Washington Consensus to individual cases. In this context, the authors present one of the most suitable models of the modified Washington consensus and ways of overcoming economic crises.

Keywords

• washington consensus
• macro-economic policy
• transition