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Dynamic Modelling of the Current Accounts: Evidence from the Caribbean

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  • Roland Craigwell
  • Sudesh Samaroo

Abstract

This paper uses time series and pooled data to estimate the current account function of a non-oil developing country (Barbados) and an oil dependent economy (Trinidad and Tobago). The pooled data reveals that the terms of trade (TOT), the government variable (BSGDP), foreign incomes (FGDP), the prime rate and long term capital flows (LTKGDP) are significant variables. The cointegration-error correction model suggests that in Trinidad and Tobago, the exchange rate, BSGDP and FGDP are important explanatory variables; for Barbados, TOT and the BSGDP ratio are influential in the long-run while the latter ratio and LTKGDP are important short run regressors. [F10, F11]

Suggested Citation

  • Roland Craigwell & Sudesh Samaroo, 1997. "Dynamic Modelling of the Current Accounts: Evidence from the Caribbean," International Economic Journal, Taylor & Francis Journals, vol. 11(4), pages 39-50.
    • Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:39-50
    DOI: 10.1080/10168739700000025
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    References listed on IDEAS

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    1. Peter C.B. Phillips & Pierre Perron, 1986. "Testing for a Unit Root in Time Series Regression," Cowles Foundation Discussion Papers 795R, Cowles Foundation for Research in Economics, Yale University, revised Sep 1987.
    2. Pastor, Manuel Jr., 1989. "Current account deficits and debt accumulation in Latin America: Debate and evidence," Journal of Development Economics, Elsevier, vol. 31(1), pages 77-97, July.
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    8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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    Cited by:

    1. Aggarwal, Raj & Simmons, Walter, 2006. "Eonomic integration among caribbean countries: Evidence from purchasing power parity, 1980-2000," Journal of Policy Modeling, Elsevier, vol. 28(3), pages 277-280, April.
    2. Aggarwal, Raj & Simmons, Walter, 2008. "Common stocastic trends among Caribbean currencies: Evidence from Guyana, Jamaica, and Trinidad and Tobago," Journal of Economics and Business, Elsevier, vol. 60(3), pages 277-289.

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