Exploring the relationship between the US monetary policy and the regional economic fluctuations

Author(s): Borda, Patrice; Montauban, Jean Gabriel (1999)

Created 22 Jul, 1999
Categories Working Papers
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Recent studies have shown that economic fluctuations in small open economies are driven by external shocks(Cushman, Zha (1995), Hoffmaister, Roldos, Wickham (1997). Using Caribbean countries as case study (Antigua and Barbuda, Belize, Barbados, Dominica, Dominican Republica, Saint Kitts and Nevis, Saint Vincent, Barbados, Saint Lucia, Jamaica, Suriname and Trinidad and Tobago), we specify and estimate a panel vector autoagressive model for GDP, real exchange rate, consumer price index and world interest rate. The resulting impulse functions are consistent with traditional open economy theory and highlight the importance of real exchange rate as transmission channel.

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