70th International Atlantic Economic Conference

October 11 - 13, 2010 | Charleston, USA

The Fiscal Multiplier in Microstates: The Case of the Caribbean

Wednesday, October 13, 2010: 12:15 PM
Kester Guy, MSc , Research Department, Central Bank of Barbados, Bridgetown, Barbados
Anton Belgrave, MA , Research and Economic Analysis Department, Central Bank of Barbados, Bridgetown, Barbados
Title: The Fiscal Multiplier in Microstates: The Case of the Caribbean

Objective :The global financial crisis and the attendant Great Recession of 2007-2009 have spawned a full-scale re-examination on the effectiveness of fiscal policy throughout the world.  While this has led to a plethora of analyses in the case of developing countries, the same abundance of the work has not been evident for developing counties. This papers uses vector autoregressive time-series analysis techniques to examine the fiscal policy decisions and its impacts in the case of three microstates: Barbados, Trinidad and Tobago and Jamaica.  While having similar degrees of openness these states differ in debt burdens and economic structures thus providing a natural laboratory on which one can examine the impact of fiscal policy.

Expected Results: Thus, this paper evaluates the effectiveness and limitations of the fiscal policies undertaken by these countries in response to the global recession.