SUBSTANCE AND RELEVANCE OF THE MUNDELL-FLEMING MODEL

Summary: Predominant preoccupation and the theme obsessing economic policy creators is the quest for such modalities of economic behaviour that will allow for simultaneous achievement of the two major targets of every open economy - internal and external equilibrium. Mechanisms for achievement of these two balances and their implications on economic policy are comprised in the Mundell-Fleming model. The objective of this work is to present Mundell-Fleming model in all its specificities, focusing on its rather controversial development, and the substance and relevance of conclusions that can be drawn.