Titlebook: Debt, Crisis Reform Bolivia; Biting the Bullet Luis Carlos Jemio Book 2001 Palgrave Macmillan, a division of Macmillan Publishers Limited 2

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The Approach of this Book to the Study of External Shocks and Policy Analysis,direction of adjustment. This chapter analyses how these institutional settings, that are particular to the functioning of the Bolivian economy, have determined macroeconomic adjustment to external shocks in the country over the last two and a half decades.

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Financial Balances,o vary from period to period in response to external shocks and to changes in domestic policy. However, in order to have a full and coherent version of the whole economy, we still need to analyse and specify adjustment for the financial sector balance; this is carried out in this chapter.

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External Shocks and External Sector Trends,g the 1980s, illegal sources of revenue also became important. This access to foreign exchange resulted in the tendency for the real exchange rate to appreciate in the long run, reducing export competitiveness and encouraging imports.

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