ABSTRACT
In this chapter, we describe the responses of the ten African economies modeled to changes in six exogenous variables representing changes in the major domestic policy instruments and foreign variables. The major domestic and foreign variables examined are 1) a devaluation of the nation’s currency with respect to the U.S. dollar, 2) a decrease in government expenditure, 3) an increase in net transfer payments from abroad, 4) an increase in world demand, 5) an increase in real commercial loans, and 6) an increase in primary commodity prices. 1 The responses of African nations to the above domestic policy instruments and international shocks is of crucial importance in identifying the most effective development and aid strategies to overcome the present crisis and stimulate the rate of economic development. 2
