HomeDLSU Business & Economics Reviewvol. 7 no. 1 (1996)

External Shocks and Macroeconomic Adjustments

Victor Pontines



No developing country can isolate itself from the world economy. Economic theory and several studies have well understood the benefits of pursuing outward oriented policies (e.g. Adelman, 1984; Balasa, 1978; Emery, 1967; Jung and Marshall, 1985; Kavoussi, 1984; Michaely, 1977; Tyler, 1981; Ram, 1987). By linking itself to the world economy, any developing country exposes itself to macroeconomic shocks, that is, economic disturbances or events which is outside the economy. Adjustments to this shocks always poses a dilemma to every policymakers.