||This thesis provides the evidence about the nature and the relative importance of domestic and foreign shocks in Slovak economy. We estimate a seven variable Vector Autoregressions system with block exogeneity restriction. Using impulse response analysis, we examine the size and the persistence of the effects of the shocks on the economy. First, we estimate the effects of domestic monetary policy shock. Next, we turn our attention to the effects of foreign shocks. Further, we study the relative importance of foreign shocks in explaining the fluctuations in Slovak aggregate variables. The results indicate that the effects of monetary policy shocks in Slovakia are consistent with economic theory. Moreover, the foreign shocks seem to play an important role in explaining the variation of the Slovak macroeconomic variables, especially for the price level.