The Polak model is a monetary approach to the balance of payment published by J. J. Polak in 1957. It seeks to model a small, open economy operating under fixed nominal exchange rate. Polak suggest explicit links between the monetary and external sectors. Polak results continue to form the theoretical bases on which the IMF Financial Programming are carried out. The Polak Model is based on the following four equations: In the model the following variables are seen as exogenous: Real Output , Exports , other foreign currency inflows .
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