Business cycles in small open economies: Jamaica and Trinidad and Tobago cases

Author(s): Borda, Patrice; Edinval, Eryc; Maurin, Alain; Montauban, Jean Gabriel 1995)

Created 22 Jul, 1995
Categories Working Papers
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The aim of this paper is to analyse the source of macroeconomic fluctuations in the small countries of the Caribbean areas. Therefore, in accordance with the Mundell-Fleming hypothesis for the analysis of economic fluctuations in open economy, the VAR methodology is used for interest rate, money supply, the cover rate, the GDP and the deflator. The paper examines Jamaica and Trinidad and Tobago. Indeed, the analysis of the response functions shows a significant difference between these states: Jamaica seems to be less vulnerable to external shocks than Trinidad and Tobago, for which the external balance enables international economic policies to be enforced in the country.

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