(The Indian Institute of the Economics, 1994) White, Howard; Kelegama, Saman
A major methodological problem in the analysis of adjustment policies is the separation of the effects of the policies themselves from those changing external conditions. But such a separation can be clearly made by decomposing the sources of change in the current account. In this paper authors apply methodology, with a number of important modifications to the experience of Sri Lanka for the period 1971 to 1991. By extending the decomposition analysis to cover the capital account authors are able to address a further important issue in the adjustment debate: namely distinguishing the impact of external finance given to support domestic policy adjustment efforts from that of the efforts themselves.