This review is an effort to explore the extent to which existing literature on post-1977 Sri Lanka can contribute towards understanding of the process by which macroeconomic policies affect the welfare of households. Crucially, it will seek to understand the impact macro policies directed at economic variables, such as inflation rates, budgetary deficit and balance of payments, have on household welfare. The specific objectives of this study wereto review existing literature on policy reforms in the post-1977 period and the literature on welfare performance during the same period. It also assesses the extent to which this literature facilitates the identification of channels of transmission between macro policy changes and welfare at the household level. The concluding section also discusses the extent to which existing literature succeeds in providing a base for identifying channels of transmission between macroeconomic policy and micro welfare. It also identifies gaps in the literature in relation to understanding the process of transformation by which macroeconomic policies impact household welfare.