Abstract
The basic principles of macroeconomic policy need to be reconsidered in the context of current global problems, in particular, environmental and social dimensions. All the redirection required for sustainable development requires a reorientation of macroeconomic policy, the design of which entails proactive government involvement. Dominant macroeconomic policy regimes are anchored on the interest-based financial system, which significantly transfers the risk from the lender to the borrower leading to adverse consequences on distributive justice and equality. Prevalence of debts in the economy will lead to divergence between the financial and real sectors of the economy, weakening the resilience of the economy. An alternative macroeconomic policy paradigm may be needed which utilizes the concept of risk sharing as a viable alternative foundation for the financial system.
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Othman, A., Mat Sari, N., Alhabshi, S., Mirakhor, A. (2017). Introduction. In: Macroeconomic Policy and Islamic Finance in Malaysia. Financial Institutions, Reforms, and Policies in Muslim Countries. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-53159-9_1
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DOI: https://doi.org/10.1057/978-1-137-53159-9_1
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