THE ROLE OF EXTERNAL SHOCKS IN CROATIA: BLOCK EXOGENEITY SVAR APPROACH

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(ProQuest: ... denotes formulae omitted.)1. IntroductionThe concept of small open economy has been a subject of research for decades (de Vries, 1973; Kuznets, 1960; Scitovsky, 1960), but a consensus on what characterises the small open economy still has not been reached. Therefore, Davenport (2001) suggested defining the small economy based on its share in the world economy and not based on demographic indicators. Based on the named criterion, a country is to be considered a small economy if its share in the total world trade amounts to less than 0.03%. Namely, small economies, despite their significant trade openness, usually have a very small share in the world trade.For many years, empirical research has focused on the effects of macroeconomic shocks and channels of their transmission, especially small and open economies. However, the recent global economic crisis in the period 2008-2009 has additionally emphasised the importance of understanding the source of shocks on key macroeco

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