How to Increase Efficiency of Economic Policy: Empirical Analysis of Government Institutions Role

Abstract

The paper analyzes the hypothesis of statistical significance of the institutional factor in the process of increasing the efficiency of economic policy in developing countries. It shows that expansion of domestic credits to private sector (aimed at increasing private investment activity including FDI) may bring about contrary results if corruption in the country is higher than the threshold level. The efficiency of anti-inflation policy in many respects depends on the quality of banking system: the higher it is the lower is the impact of money supply on inflation and vice versa. The main reserves of increasing efficiency of anti-inflation policy in the CIS countries are strengthening of banking potential and energy saving. The priority of institutions development measures as compared to selective measures of government support of separate sectors of economy is justified.