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The comprehensive economic reform program instituted by the Government of Kazakhstan gave rise to a need for an analytical framework to coordinate a broad set of macroeconomic policies and structural adjustments required to sustain the country's transition to an independent and open market economy. The conceptual approach adopted for this project is based on conventional economic theory, although the empirical specification of the theory is not well established in standard macro models. The system formulated explicitly introduced into the system of equations the channels through which economic policies operate. The nature of the model therefore makes it tractable from an operational point of view, and it provides the basis for subsequent extensions of the real and financial sectors, and in both the domestic and external sectors of the economy of Kazakhstan.USAID/Romania (123 pages). December 1994.