The impact of external economic disturbances on Yugoslavia: Theoretical and empirical explorations

Within the context of the transmission and response framework this paper analyzes the impact of recent international economic disturbances on Yugoslavia. Included are an analysis of the channels through which these disturbances were transmitted to Yugoslavia, the manner in which they altered domestic price and quantity signals, and the reactions of policy makers. Empirical tests of simple Keynesian and monetarist models of the transmission process are presented. These tests provide empirical evidence on the demand effects, the direct and indirect price effects, and the real-balance effects of international disturbances in the Yugoslav economy.