The Eastern Caribbean Currency Union: Would a Fiscal Insurance Mechanism Mitigate National Income Shocks?
Author/Editor: Antonio Lemus, Paul Cashin
Release Date: © January, 2012
ISBN
: 978-1-46393-122-3
Stock #: WPIEA2012017
English
Stock Status: On back-order
Languages and formats available
English | French | Spanish | Arabic | Russian | Chinese | Portuguese | |
Paperback | Yes | ||||||
Yes |
Description
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.
Taxonomy
Economic cooperation , Economic policy , Fiscal policy , Monetary unions
More publications in this series: Working Papers
More publications by: Antonio Lemus ; Paul Cashin