New Working Papers Available Now

Author(s): Central Bank Of Barbados

Created 16 Jan, 2018
Categories General Press Release
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Working papers are academic articles that are a work-in-progress. They are submitted by the author(s) and posted on the Central Bank of Barbados website for comments and suggestions. The Central Bank of Barbados and the authors of all of our working papers welcome any feedback you might have. Comments can be sent to Please cite the name of the paper, the author(s) and the working paper's number (e.g. WP/18/1).


Determinants of Public Expenditure in Barbados: An Exploratory Study – Nlandu Mamingi and Nikita Bishop

This exploratory study attempts to ascertain and analyse the drivers of public expenditure in Barbados in the period 1980-2013 via aggregated and disaggregated approaches. Using the autoregressive distributed lag (ARDL) methodology à la Pesaran et al. (2001). The study uncovers the following key results. At the aggregate level, in the long run, real GDP, tax revenue, foreign direct investment, debt servicing, and unemployment positively affect public expenditure. On the contrary, budget deficit and foreign aid negatively affect public expenditure in the long run. The long-run results are qualitatively uncovered in the short run. At the disaggregate level, the capital expenditure results are in many instances the opposite of those for current expenditure. Where comparable, it is found that long-run estimates are predominantly larger than short-run estimates. As policy implications, it is important to determine the levels of tax revenue, public debt, FDI, foreign aid, budget deficit, and unemployment that are consistent with a healthy public expenditure, that is, the one which yields a sustainable economic growth, a non-runaway budget deficit and a manageable public debt.


Estimation of the Pass-Through Effect of International Food and Energy Prices on Domestic Prices: The Case of Barbados – Darrin Downes, Nlandu Mamingi, Alexis Lescott and Laron Alleyne

Barbados as a small, very open economy possesses a high dependence on imported goods for production and consumption purposes. As a result, the inflationary process in Barbados is influenced largely by foreign price inflation. Previous research has focused primarily on the determinants of retail price inflation in Barbados and not explicitly on the estimation of the speed of pass-through effects of international commodity prices on domestic inflation. Using quarterly data for the period 1985:Q1 to 2015:Q4, the study estimates a VECM, generalised impulse responses and variance decompositions to capture the speed and magnitude of international commodity price fluctuations. The findings indicate a relatively slow speed of adjustment of domestic prices from disturbances away from equilibrium. International energy prices were found to exhibit a faster rate of pass-thorough to domestic prices in the short-run, while the reverse was found for international food prices in the long run.


Chinese Renminbi in the Caribbean: Opportunities for Trade, Aid and Investment – Stephan Maier, Roger McLeod and Amos C. Peters

Over the last two decades, the role of the People’s Republic of China in global trade and in global investment has been ever expanding, resulting in an increasing engagement with the Caribbean. The accelerating internationalisation of the Chinese Renminbi (RMB) is a logical consequence of this Chinese quest for global geo-political influence. We analyse the potential benefits and risks of the use of RMB in the Caribbean, by also drawing on insights from existing examples of its use in commercial trade between China and Suriname. We also address the issue of de-risking and potential access to global financial services via the provision of Chinese corresponding banking relationships and access to Chinese payment systems. Eventually, the paper discusses the findings so as to provide policy recommendations regarding the use of RMB for the Caribbean.



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