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Production and employment cycles in Barbados: the case of Barbados and Trinidad and Tobago

This paper investigates some of the topics related to the discerning of trends and cycles in production and unemployment data of the Caribbean economies of Barbados and Trinidad and Tobago. Using the Holdrick-Prescott and Baxter-King filters, this study proposes a chronology and description of some of the cyclical properties of these series. Next, it examines the causality relationships that combine these variables. Empirical evidence from the cross-correlation coefficients indicates that the unemployment rate leads the cycle in both countries. A test of Okun's Law suggests that it may not be relevant in these two economies and hence, and may not be a correct measure of unoccupied resources.
 

WP 2002 pp71_90