Business Cycles in the Eastern Caribbean Economies
No hay miniatura disponible
Fecha
Título de la revista
ISSN de la revista
Título del volumen
Editor
World Bank, Washington, DC
Resumen
Descripción
This paper analyzes the business cycle
characteristics of the economies of the Organization of
Eastern Caribbean States using a model of a small open
economy subject to interest rate and fiscal expenditure
shocks and financial frictions. The paper shows that
macroeconomic aggregates in this region are quite volatile,
with consumption exhibiting higher volatility than gross
domestic product. The analysis also finds that in these
economies real interest rates are highly volatile and
strongly countercyclical with gross domestic product and
other macroeconomic aggregates. Similarly, fiscal
expenditures show significant volatility, but are
pro-cyclical with gross domestic product. The results
suggest two major directions for designing policies to help
reduce the volatility experienced by the Organization of
Eastern Caribbean States economies. First, Organization of
Eastern Caribbean States countries should seek a greater
openness to international financial markets, which could
help them smooth out the effects of fundamental shocks, such
as shocks to technology and terms of trade, and shocks
associated with natural hazards. However, this removal of
international financial barriers needs to be accompanied by
improvements in domestic financial conditions, as this would
reduce the vulnerability of these economies to country risk
premium shocks. Second, the Organization of Eastern
Caribbean States region should try harder to move toward a
countercyclical fiscal policy stance, as this could help to
stabilize the domestic risk premium and cushion the negative
effects of interest rate shocks on economic activity, hence
reducing volatility.
Palabras clave
CREDIT MARKETS, MONETARY POLICY, HOLDING, GOVERNMENT EXPENDITURES, ECONOMIC GROWTH, REAL INTEREST RATES, STOCK, INTERNATIONAL CREDIT, FISCAL DEFICITS, DISPOSABLE INCOME, INCOME, INTEREST, GOVERNMENT SPENDING, EMERGING ECONOMIES, DOMESTIC FINANCIAL MARKETS, INTEREST RATE, REAL GDP, EXCHANGE, GOVERNMENT REVENUES, INTERNATIONAL BOND MARKET, GDP PER CAPITA, INTERNATIONAL FINANCIAL MARKETS, DEVELOPING COUNTRIES, EXPORTS, ELASTICITY, REAL INTEREST, POLITICAL ECONOMY, EXPORTERS, REVENUES, ECONOMIC STRUCTURE, PORTFOLIO, FISCAL POLICY, WELFARE, RISK PREMIUM, BONDS, MIDDLE INCOME COUNTRY, LOAN, VARIABLES, DISCOUNT, LOAN AMOUNT, CAPITAL CONSTRAINT, TAX, NON-PERFORMING LOANS, RETURNS TO SCALE, WEALTH, INFLATION, INTERNATIONAL BANK, TRENDS, ECONOMIC OUTLOOK, MACROECONOMIC RISK, BUDGET, FISCAL CONSTRAINTS, INTEREST EXPENDITURES, ECONOMIC ACTIVITY, DEVELOPMENT, BOND TRADING, FISCAL POLICIES, INFLUENCE, TRADE BALANCE, OIL PRICES, TOTAL FACTOR PRODUCTIVITY, MARKET DEVELOPMENT, DEVELOPMENT ECONOMICS, RENT, DEBTS, INCOME INEQUALITY, CONSTANT RETURNS TO SCALE, TRADING, PRODUCTIVITY, INTERNATIONAL BOND, INTEREST RATES, MONETARY FUND, NATURAL DISASTERS, NET EXPORTS, MARKETS, DEBT, RETURN, DEFICITS, INFLATION RATE, OPEN ECONOMY, LENDERS, BUSINESS CYCLE, INCOME LEVELS, LOANS, TAX REVENUES, REAL INTEREST RATE, ELASTICITY OF SUBSTITUTION, UTILITY, BORROWING COSTS, GROSS DOMESTIC PRODUCT, FINANCE, ECONOMIC RESEARCH, TAXES, FIXED EXCHANGE RATE, LDCS, INVESTMENT DECISIONS, EXPENDITURE, DEBT LEVELS, PRODUCTIVITY GROWTH, CONSUMPTION, BUDGET CONSTRAINT, HUMAN CAPITAL, INDUSTRIAL ECONOMIES, GOOD, CAPITAL, WAGES, COUNTRY RISK, FINANCIAL CRISIS, FUTURE, VALUE, RETURNS, CREDIT, MACROECONOMICS, PERMANENT INCOME, GOVERNMENT EXPENDITURE, UTILITY FUNCTION, INTEREST PAYMENT, AGGREGATE DEMAND, BOND MARKET, WORKING CAPITAL, ECONOMIC FLUCTUATIONS, GOVERNMENT REVENUE, ECONOMY, AGRICULTURE, EXPENDITURES, ELASTICITY OF LABOR SUPPLY, PROPERTIES, DOMESTIC FINANCIAL MARKET, HUMAN CAPITAL DEVELOPMENT, MARKET, BENCHMARK, MACROECONOMIC VARIABLES, BUSINESS CYCLES, FUNCTIONAL FORMS, GOVERNMENT DEBT, GOVERNMENT POLICIES, TRADE, INVESTMENT RATES, GDP, GOODS, ECONOMIES OF SCALE, FINANCIAL MARKET, GROWTH RATE, MACROECONOMIC VOLATILITY, INVESTMENT, BOND, SHARE, FINANCIAL MARKETS, CAPITAL REQUIREMENT, GINI COEFFICIENT, REVENUE, LEVIES, LENDING, CONSUMER PRICE INDEX, STATISTICAL ANALYSIS, CONSUMPTION FUNCTION, GDP DEFLATOR, REMITTANCES, PROFITS, INTEREST RATE POLICIES, COMMODITY PRICES, OPEN ECONOMIES, MARGINAL UTILITY, MACROECONOMIC PERFORMANCE, INTERNATIONAL MARKETS, ECONOMIC STATISTICS, DEVELOPMENT POLICY