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Monetary Policy, Central Banking and Economic Performance in the Caribbean

Monetary Policy, Central Banking and Economic Performance in the Caribbean

by Derick Boyd and Ron Smith

160 Pages

Paperback
9789766402525
Published: August 2011

$45.00

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Despite their common British colonial heritage, the twelve Caribbean economies examined in this book exhibit a wide variety of monetary regimes. These include a currency union, currency board, and fixed and floating exchange rate regimes which allow for a range of rules and discretionary-based monetary policies. Derick Boyd and Ron Smith trace the historical origins and evolution of this variety of Caribbean institutions and examine the effect of policy regime on economic performance, using theoretical economic analysis and several econometric techniques, which they explain in detail. Their conclusion is that better economic performance has benefited from an embedded tradition of conservative central banking, either hardwired, as in the case of a currency board, or through discretionary policies, a tradition which seems to have been largely eroded in the resource-rich economies.

Illustrations
Preface
Acknowledgements
Abbreviations
Introduction to Monetary Policy in the Caribbean
Country Characteristics, Monetary Institutional Background, Central Banks and Economic Performance
Monetary Policy Transmission Mechanisms in Developing Countries
The Data
Econometric Methods and Issues
Estimating the Monetary Policy Effects on Inflation and Output
The Monetary Transmission Mechanism: Vector Error Correction Modelling and Cointegration
Caribbean External Balance Adjustment: The Marshall-Lerner Condition and J-Curve Conclusions
References
Index

Derick Boyd is Executive Director of the Caribbean Centre for Money and Finance, University of the West Indies, St Augustine, Trinidad and Tobago, and Reader in Economics, University of East London, where he teaches econometrics and macroeconomics. He was a Fulbright-Hays visiting senior scholar, Massachusetts Institute of Technology, Cambridge, United States, and a former lecturer in economics at the University of the West Indies, Mona, Jamaica.

Ron Smith is Professor of Applied Economics at Birkbeck, University of London, where he teaches econometrics and statistics. He has also been a visiting professor at London Business School and the University of Colorado. He has published on a variety of topics in applied econometrics and defence economics.

“This book is a work of impressive scholarship. It is essential reading for Caribbean economists who seek to understand the institutional evolution of Caribbean monetary regimes over the colonial era and since independence, and for regional economic policymakers perplexed by the wide variation of economic performance among Caribbean states.”

—Sir Courtney Blackman, Founding Governor, Central Bank of Barbados

“The authors provide a detailed explanation of the theoretical monetary relationship that underlies the establishment of colonial Caribbean monetary relations and trace the changes that underlie the contemporary Caribbean monetary institutional framework. They offer a valuable explanation and analysis of the determination of contemporary Caribbean monetary policies. It is a benchmark study of Caribbean monetary policy and central banking.”

—Kempe Ronald Hope, United Nations Development Programme

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