The Use Of Flow‐Of‐Funds Accounts In Monetary Planning In Yugoslavia

The increased role of monetary and other financial variables has required the introduction of a quantitative framework for monetary policy planning. This has been found in a planning procedure based on flow‐of‐funds accounts. The very comprehensive structure of these accounts is relied upon to provide to policy makers with quantitative indications as to policy goals and measures for their implementation, and at the same time, to ensure a consistent incorporation of monetary planning in general economic planning. There are annual and monthly plans. Annual planning involves two stages. The first is projection of flow‐of‐funds accounts on the basis of appropriate relationships, historical trends, institutional changes, economic policy targets, etc. The final result of this stage of planning is a projection of the Monetary Sector transactions as residuals, including changes in money supply and in short‐term credits as key projections. The second is decomposition of the Monetary Sector account into the Central Bank Sector and the Other Banks Sector, which makes possible a projection of measures for the implementation of projected changes in short‐term credits and money supply. Monthly planning has two objects: first, to check annual projections and, if necessary, to adjust them to actual developments; and second, to introduce seasonal components. Seasonal adjustment is made only for the Monetary Sector, its two subsectors, and credit policy measures. Monthly projections are made every month for three months in advance.