This study examines how monetary and fiscal policies are implemented in Caribbean small states, tracing the differences and similarities in tax structure, current expenditure and current revenues. It shows the impact of monetary policy on inflation and the importance of exchange rate regimes to the effectiveness of monetary policy in the region. The authors show that fiscal stabilisation in the region is very low and as such countries within the region would benefit from insurance mechanisms and stabilisation funds.
Anthony Birchwood is a Research Fellow at the Caribbean Centre for Money and Finance. He has published widely in areas of related to banking, monetary and fiscal policy, trade and economic integration. Dr Marielle Goto is a Caribbean-born economist specialising in the analysis of small states macroeconomics. She is the author of a number of papers on vulnerability and macroeconomic policies in the Caribbean and issues of vulnerability and resilience.
Preface 1. Monetary Policy Frameworks of Commonwealth Caribbean Economies, Anthony Birchwood 1.0 Introduction 2.0 Choice of monetary frameworks practised by the regional central banks 2.1 Choice of Monetary Frameworks 2.2 Use of instruments to achieve Monetary Goals 2.3 Use of interest rates 3.0 Comparison of Macroeconomic Performances According to Style of Monetary Policy 4.0 Stabilisation Outcomes of Monetary Frameworks 4.1 Cost of Fixed Exchange Rate as an Anchor 4.1.1 Regional Experiences 4.2 The Movement of Exchange Rates in the Managed Exchange Rate Regimes 4.2.1 Cost of Managed Exchange Rates: The CARICOM Experience 5.0 Summary of Cost Benefit Comparison of Monetary Frameworks in the Caribbean 6.0 Concluding Remarks Bibliography Appendix A Appendix B Annex III 2. Fiscal Policy frameworks of Commonwealth Caribbean economies, Dr Marielle Goto Introduction Part I: Key Issues and Lessons Learned 1.1 An Important Vulnerability Towards Natural Disasters 1.2 An Econometric Assessment of Fiscal Stabilisation in some Countries of the ECCU 1.2.1 Selection of Countries and Data 1.2.2 Panel Data Econometrics 1.2.3 Results 1.3 The Alternative of Insurance: Stabilisation Funds and Insurance Facility Against Disasters 1.3.1 Insurance Against Natural Disasters: the Caribbean Risk Insurance Facility (CCRIF) Conclusion Part II: Fiscal Strategies in Small States 1.1 Optimal Fiscal Policy in Developing Countries 1.2 An Assessment of Fiscal Policy Response in the Caribbean: examples of Grenada, St Kitts & Nevis, St Lucia & the Grenadines for the period 1983-2001 Results 1.3 An Assessment of Fiscal Strategies in some Caribbean Countries from Productive Development Policies and some Fiscal Reforms 2.3.1 Productive Development Policies in Barbados, Jamaica and Trinidad and Tobago 2.3.2 The Implementation of VAT in some Caribbean Countries 2.3.3 Some Elements about Fiscal Space Conclusion Part III: Country Case Studies 3.1 Case Study: The Bahamas 3.1.1 National Accounts 3.1.2 Fiscal Structure 3.2 Case Study: Jamaica 3.2.1 National Accounts 3.2.2 Fiscal Structure 3.3 Case Study: Trinidad & Tobago Conclusion Reference Tables Charts