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Demand and Supply Shocks in the Caribbean Economies: Implications for Monetary Union

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  • Eric Pentecost
  • Paul Turner

Abstract

This paper uses the method of structural vector autoregressions to decompose movements of real output and prices into demand and supply innovations for four Caribbean economies: Barbados, Jamaica, Trinidad and Tobago, and Guyana. The aim of the analysis is to assess if these economies could feasibly form part of a Caribbean monetary union. Correlations between the demand and supply innovations are, however, typically low, indicating that monetary union may lead to greater stabilisation problems for these economies.

Suggested Citation

  • Eric Pentecost & Paul Turner, 2010. "Demand and Supply Shocks in the Caribbean Economies: Implications for Monetary Union," The World Economy, Wiley Blackwell, vol. 33(10), pages 1325-1337, October.
    • Handle: RePEc:bla:worlde:v:33:y:2010:i:10:p:1325-1337
    DOI: 10.1111/j.1467-9701.2010.01275.x
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    References listed on IDEAS

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    Cited by:

    1. Samuel Braithwaite, 2017. "What Do Demand and Supply Shocks Say About Caribbean Monetary Integration?," The World Economy, Wiley Blackwell, vol. 40(5), pages 949-962, May.
    2. Juan Carlos Cuestas & Carlyn Ramlogan-Dobson, 2013. "Convergence of Inflationary Shocks: Evidence from the Caribbean," The World Economy, Wiley Blackwell, vol. 36(9), pages 1229-1243, September.
    3. Juan Carlos Cuestas & Carlyn Dobson, 2011. "Inflation persistence: Implication for a monetary union in the Caribbean," Working Papers 2011017, The University of Sheffield, Department of Economics.

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