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In this paper the author wanted to show the causes and effects of economy policy during a very peculiar transition period in Republic of Croatia from the moment of its independence in the early nineties until 2005. Trough a theoretic definition of stabilization policy the author intended to obtain a framework necessary to understand the historic and economical context. In order to explain major economical and non-economical causes of the state of Croatian economy the author uses different graphs of major macro economical indicator and provides their interpretation. An overview of political acts such as state stabilization programs and their implementation were necessary in order to detect main problems of the new situation in Croatian economy as well as what caused it. Furthermore, the author compared the results of the implemented stabilization policy and put them in an international context by contrasting Croatia and its economy with economical results of similar transition countries in order to obtain an objective picture. Throughout the paper the author portrayed economical spectrum of problems which existed and concluded they still exist in Croatian economy either because of the burdens of the past or because of a lack of vision of progress. [ABSTRACT FROM AUTHOR]