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Research Working Papers 2002

These are draft research papers prepared by the economists in the Research Department of the Central Bank of Barbados. Copies are produced for distribution in the publication Working Papers published annually by the Bank. Expressed permission is required from the authors before they can be quoted, or reproduced.

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  • THE CURRENT STATE AND FUTURE OF CARIBBEAN AGRICULTURE
    by Patrick Kendall and Marco Petracco
    IN:  Working Papers 2002 pp 91- 102
    1. Agriculture.  2. Food Imports. 3. Food Dependence. 4. Food Security. 5. Caribbean.

The paper reviews the performance of the agriculture sector over the period 1970 to 1999 with specific focus on export agriculture, food imports, food dependence and security.  The data was obtained from the FAO online database.  The study covers CDB's Borrowing Member Countries (BMCs) excluding the dependent territories, but also includes Suriname and Haiti which are prospective CDB members.

  • DEBT AND FISCAL SUSTAINABILITY IN BARBADOS
    by Xiomara Archibald and Kevin Greenidge
    IN: Working Papers 2002     - Bridgetown  : Central Bank of Barbados, 2003.  pp 11 - 30
    1. Fiscal Deficit.  2. Debt.  3. Sustainability.

    The question of debt and fiscal sustainability is very important for adequate macroeconomic management.  This paper looks at the sustainability of the Government of Barbados' policies with respect to the financing of public expenditure and debt management in the post-independence era.  In this regard, co-integration testing of the present value budget constraint - using both fixed and time varying coefficients - was the main tool of the empirical analysis of the sustainability of the historical fiscal process.  The findings suggest that this process has, in fact, been sustainable and point to prudent public sector policies by fiscal authorities. (more ...)

  • AN EMPIRICAL EXAMINATION OF THE RELATIONSHIP BETWEEN COMMERICAL BANKS AND CREDIT UNIONS IN A SMALL OPEN ECONOMY
    by Roland Craigwell, Winston Moore and Anton Belgrave
    IN: Working Papers 2002 -     Bridgetown  : Central Bank of Barbados, 2003. pp 1 - 10
    1. Credit Unions.  2. Competition. 3. Commercial Banks. 4. Economic Models.

    This study empirically examines the relationship between commercial banks and credit unions using cross-sectional time series firm level data in a typical small open economy.  unlike previous studies, which were largely static in nature, the paper accounts for the dynamic interaction between commercial banks and credit unions using an auto regressive distributed lag framework. Two hypotheses are examined:  first, whether commercial banks competition influences credit union activity and second, whether credit union competition impacts on commercial banks' decision making processes.  The study finds evidence that credit unions competition positively influences commercial banks profitability, and credit unions' profitably and interest rate spreads are in turn, negatively affected by commercial bank's competition.     (more ...)

  • ESTIMATING THE SIZE OF THE HIDDEN ECONOMY IN BARBADOS
    by Stuart Mayers, Darrin Downes and Kevin Greenidge
    IN: Working Papers 2002 -      Bridgetown  : Central Bank of Barbados, 2003. pp 31 - 44
    1. Informal Sector.  2. Hidden Economy.  3. Barbados.

In Barbados, and the Caribbean as a whole, very little research has been done on the topic of the informal economy.  This paper attempts to estimate the size of the Barbadian informal sector, using two indirect techniques.  Annual data from 1974 to 2001 was applied to the currency demand approach, while the labor force statistics method utilized data from 1975 to 1998.  Both systems generated similar results, showing the informal economy in Barbados is very small.  However, this sector, no matter how small in size, should be taken into account while making policy decisions and hence, deserves further investigation. (more ...)

  • FISCAL STANCE IN SAVINGS/INVESTMENT CONSTRAINED ECONOMIES
    by Anthony Birchwood and Rudolph Matthias
    IN: Working Papers 2002 -     Bridgetown  : Central Bank of Barbados, 2003.  pp 45 - 54
    1. Developing Countries.  2. Private Sector.  3. Economic Policyt.  4. Investments.  5. Economic Growth.  6. Central Banks.

 The study explores the notion that governments in developing countries are more likely to run balanced or surplus budgets, where private sector investments are energised by a relaxation in the savings constraint.  On the other hand, we contend that fiscal deficits are likely to persist where private sector investments are sub-optimal and savings constrained. To investigate the arguments, a logit model is applied to a sample of countries to see whether such a constraint is associated with the fiscal stance of governments.  Private sector savings were assumed to be directly correlated with net current account earnings, foreign direct inflows, the income status of the country and growth.  With the exception of economic growth, positive developments in these variables turned out to be significant to the likelihood of the government adopting a surplus fiscal budget. (more ...)

  • FORECASTING TOURIST ARRIVALS : the use of seasonal unit root pre-testing to improve forecasting accuracy
    by Dillon Alleyne
    IN: Working Papers     2002 - Bridgetown  : Central Bank of Barbados, 2003.  pp 55 - 70
    1. Economic Forecasting.  2. Tourism.

    This paper focuses on forecasting tourist arrivals in tourism dependent economy and the impact of pre-testing for seasonal unit roots and imposing various filters, on forecasting accuracy.     (more ...)

  • PRODUCTION AND EMPLOYMENT CYCLES IN BARBADOS : the case of Barbados and Trinidad and Tobago
    by Roland Craigwell and Alain Maurin
    IN: Working Papers     2002 - Bridgetown  : Central Bank of Barbados, 2003.  pp 71 - 90
    1. Unemployment.  2. Production. 3. Economic Models. 4. Economic Forecasting. 5. Barbados. 6. Trinidad and Tobago.

         This paper investigates some of the topics related to the discerning of trends and cycles in production and unemployment data of the Caribbean economies of Barbados and Trinidad and Tobago.  Using the Holdrick-Prescott and Baxter-King filters, this study proposes a chronology and description of some of the cyclical properties of these series.  Next, it examines the causality relationships that combine these variables.  Empirical evidence from the cross-correlation coefficients indicates that the unemployment rate leads the cycle in both countries.  A test of Okun's Law suggest that it may not be relevant in these two economies and hence, and may not be a correct measure of unoccupied resources. (more ...)

  • THE TAIL BEHAVIOUR OF STOCK INDEX RETURN ON THE JAMAICAN STOCK EXCHANGE
    by Terence D Agbeyebe and Gene Leon
    IN: Working Papers 2002 -     Bridgetown  : Central Bank of Barbados, 2003.  pp 103 - 110
    1. Stock Markets.  2. Capital Markets.  3. Economic Models.  4. Jamaica.

This paper is concerned with the application of extreme value theory (EVT) to daily stock market closing prices on the Jamaican Stock Exchange to determine whether or not stock market returns follow a heavy-tail stable distribution.  Our empirical results do not reject a heavy tail stable distribution for returns.  It also establishes that the Jamaican Stock Exchange return index has a significantly fatter tail than returns from the industrial markets. (more ...)

 

 
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