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The Equilibrium in the Open Economy

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  • Stoyadin Savov

Abstract

On the basis of the IS - LM - BP model is interpreted the equilibrium of the transition economy in Bulgaria and the conditions influencing on its varieties are identified. Suggested is an approach in the macroeconomic policy, with the help of which the economic mechanism of the system is possible to become more market. Analyzed are the factors, influencing the forming of the curves IS, LM and BP. It is mentioned that an instrument for overcoming the non-equilibrium of the economy can be the mixed monetary-fiscal policy, recommended by the conception, known under the name of Mundel-Fleming model. The two, applied separately for curing the non-equilibrium economy, are not able to suggest a solution. But if they are applied combined, the weaknesses of the one can be neutralized by the other, because for the overcoming of the internal non-equilibrium will be used an expansive fiscal policy and for the overcoming of the external one - a restrictive monetary policy.

Suggested Citation

  • Stoyadin Savov, 2001. "The Equilibrium in the Open Economy," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 3-21.
  • Handle: RePEc:bas:econth:y:2001:i:6:p:3-21
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    More about this item

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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