THE DEMAND FOR MOTOR CAR IMPORTS IN BARBADOS

Author(s): Moore, Alvon; Walkes, Carlon; (2009)

Created 27 Jul, 2009
Categories Working Papers
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Over the past 25 years Barbados’ import of motor cars increased considerably. The upsurge in the trade of motor cars has a direct impact on the size of government revenue, profits of car dealers, the size of the current account deficit, fuel consumption and the level of noise and air pollution present in the island. Moreover, the growing car industry creates jobs for many Barbadians, and is usually considered synonymous with economic advancement. In light of these issues, this paper examines the responsiveness of the aggregate demand for motor cars to changes in income and other economic variables. Employing an Ordinary Least Squares (OLS) procedure, the study finds that car imports in Barbados are influenced by real income, the price of the cars and interest rates. The results also suggest that monetary policy asserts superiority over fiscal policy in limiting the importation of cars.

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