‘Suppose, for example, that we identify macroeconomic instability as the binding constraint in a particular economy.

In a previous era, an economic adviser might have recommended specific fiscal and monetary policies – a reduction in fiscal expenditures or a ceiling on credit – geared at restoring macroeconomic balances.

Today, that adviser would supplement these recommendations with others that are much more institutional in nature and fundamentally about governance.

So he or she might advocate making the central bank independent in order to reduce political meddling, and changing the framework for managing fiscal policy – setting up fiscal rules, for example, or allowing only an up-or-down legislative vote on budget proposals.’