Independence and Macroeconomic Stabilization in ex-Yugoslav and Former Soviet Republics

Abstract

The breakup of the Soviet Union and the former Yugoslavia raises the question of the economic viability of the new post-Communist states. It is distinctly possible that separation was economically irrational exante, for at least some of the new states.' This, however" will be eternally debatable, while expost results can at least be studied empirically. The useful studies undertaken by Uvalic and von Selm, discussing the costs and benefits of the breakup of the former Yugoslavia and the Soviet Union respectively, rely more on theoretical argument and prediction than on analysis of postindependence outcomes. This essay attempts a more modest task: to see whether separation has facilitated the new states' efforts to handle the urgent tasks of bringing down inflation rates and creating a macroeconomic en virorunent conducive to economic growth.