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Macroeconomics is the branch of economics that deals with the overall functioning of
the economy.  Macroeconomic policies are critical in shaping the landscape within
which factor markets (such as labor and capital) and product markets (such as shoes,
cars, or bread) operate. They have a critical influence on decisions by companies to
produce, hire or fire workers, or export and import goods, for example. They also
determine household decisions to consume, save, and borrow, and government
decisions to invest in infrastructure, education and many other aspects of
development.

Macroeconomic policies include taxes, government spending and borrowing,

exchange rate determinants, and monetary and credit rules. The primary goal of
effective macroeconomic policies is to reduce uncertainty and risk in economic
decision-making.  A stable macroeconomic environment enhances prospects for
growth and improved living standards.  But stability is not the only concern: these
policies also have an important impact on how income is distributed across economic
classes and across generations. The World Bank Group’s primary goals are to reduce
poverty and ensure shared prosperity, and its macroeconomists are no exception.
They work to help policymakers better understand and manage macroeconomic policy
so that it works to reduce the number of people living in poverty and to increase the
number of people who can share in the benefits of rising incomes.

While governments’ choices on macroeconomic and fiscal policies are already

complicated, they gain a significant layer of complexity in countries facing fragility and
conflict. Over the past decade the world has witnessed a resurgence of conflict across
a variety of countries, including both low-income and middle-income countries. In
some contexts, macroeconomics can be considered a driver or enabler of conflict. This
is the case in societies where the distribution of natural resource rents is contested
and at the root of conflict. In some cases, macroeconomic policymakers are working to
achieve the goals of growth, poverty reduction and shared prosperity in an
environment constrained by fragility and conflict. The efficacy of certain approaches
will depend on the challenges facing a country at the different stages of conflict:  in
contexts of fragility, during conflict, and in a post-conflict environment (stabilization,
reconstruction, kick-starting growth, building resilience).These macroeconomic policy
choices will also vary based on countries’ income levels, endowments of human and
physical capital as well as natural resources, not to mention the state’s institutional
capabilities.