This study analyses the structural causes of macroeconomic instability, which has been the bane of the Philippines over the past two and a half decades. Structural factors also explain why, despite the similarity in various areas of economic policies, the Philippines was systematically outperformed by many of its East Asian neighbours.

The central argument is that the segmented and oligopolistic financial and commodity markets, large income inequalities, and diverging savings and investment behaviour of public and private sector agents are the structural and institutional features underlying the persistent macroeconomic imbalances. Several quantitative techniques are applied including a Macroeconomic Social Accounting Framework (MASF) and Computable General Equilibrium (CGE) modelling.

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The breakdown of macroeconomic aggregates into four institutions, i.e. households and unincorporated businesses, private corporate enterprises, public enterprises, and the general government, and the incorporation of their heterogenous behaviour, allows for the incorporation of political economy analysis. The overall thrust of the book thus leaves room for unconventional policy proposals.

While the type of analysis employed in this book is already beginning to proliferate, other studies lack the integrated and robust framework for policy analysis.