The Eastern Caribbean Currency Union: Would a Fiscal Insurance Mechanism Mitigate National Income Shocks?

WPIEA2012017 Image
Price:  $18.00

Author/Editor: Antonio Lemus, Paul Cashin
Release Date: © January, 2012
ISBN : 978-1-46393-122-3
Stock #: WPIEA2012017
Stock Status: On back-order

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This paper studies the nature of the shocks affecting the Eastern Caribbean Currency Union (ECCU), and examines whether a hypothetical Eastern Caribbean fiscal insurance mechanism could insure member countries of the union against asymmetric national income shocks. The empirical results suggest that a one dollar reduction in an ECCU member country's per capita personal income could trigger, through reduced income taxes and increased transfers, flows equivalent to about 7 percent of the initial income shock. Each member of the currency union could benefit as well, although the extent of shock mitigation differs across individual countries.


Economic cooperation , Economic policy , Fiscal policy , Monetary unions

More publications in this series: Working Papers

More publications by: Antonio Lemus ; Paul Cashin