Achieving the transformations needed to sustain-productivity led growth is not
simply a matter of microeconomic economic forces and policies alone. Macroeconomic
and financial stability are also essential. Macroeconomic and financial instability are
inimical to the ability of businesses to make sound investment and other decisions as
well as to the capabilities of financial and other institutions that are critical to resource
allocation. Numerous historical experiences, including that of Japan during the 1990s,
have underscored the severe and protracted impediments to growth that macroeconomic
and financial stability can pose.