| Date: |
10/28/2016 |
| Author(s): |
Elton Bollers and Tarron Khemraj |
Using time-series econometric techniques, this paper examines the relationship between foreign
exchange shocks and economic growth. These shocks result from a trend stationary process of
the level of foreign exchange given the economic structure of the economies under study. The
empirical model is motivated by a theoretical framework showing the connection between the
localized foreign exchange market and economic growth. The estimation is conducted for ten
small very open economies: The Bahamas, Barbados, Guyana, Jamaica, St. Lucia, Belize,
Mauritius, Grenada, Fiji and Trinidad and Tobago. The results indicate a noticeable effect of
foreign exchange shocks on economic growth. The estimates reveal that the growth of physical
capital is also important in determining economic growth, while the results for population growth
are more mixed.
Foreign Exchange Shocks and Economic Growth in selected Small Very Open Economies by Elton Bollers and Tarron Khemraj.pdf (662.83 KB)