Economic Resilience with An Exchange Rate Peg: The Barbados Experience, 1985-2000
IMF Working Papers, August 1, 2003
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- Economic Resilience with An Exchange Rate Peg: The Barbados Experience, 1985-2000
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Bibliographic details
- Authors: Roland Craigwell, Kevin Greenidge, Harold Codrington, Rupert D Worrell
- Published: August 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858280.001
Summary
- The paper discusses the institutional arrangements for exchange rate targeting in Barbados and the critical role they played in the policy response to its balance of payments crisis of 1991-92.
- The framework featured ongoing cooperation between the central bank and the Ministry of Finance.
- The framework included the use of a forecast model which highlighted the size of fiscal adjustment needed to secure foreign reserves adequate to maintain the exchange rate peg.
Institutional arrangements for exchange rate targeting
- Ongoing cooperation between the central bank and the Ministry of Finance was central to the framework.
- Exchange rate targeting relied on institutional coordination to manage external balances and reserve adequacy.
Policy response to the 1991-92 balance of payments crisis
- The institutional framework informed the policy response to the balance of payments crisis of 1991-92.
- The forecast model was used to determine the fiscal adjustment required to secure foreign reserves sufficient to maintain the exchange rate peg.
Role of the forecast model and fiscal adjustment
- The forecast model highlighted the size of fiscal adjustment needed to secure foreign reserves adequate to maintain the exchange rate peg.
- Fiscal consolidation was a key policy lever identified by the analysis to preserve the peg.
Subjects and keywords (as listed)
- Subjects: Banking, Central banks, Fiscal consolidation, Fiscal policy, Foreign exchange, Inflation, International reserves, Prices
- Keywords: adjustment program, balance of payments, Barbados economy, Barbados exchange rate anchor, Barbados experience, Barbados policy framework, Barbados' balance of payments crisis, Caribbean, cash flow, central bank, central bank of Barbados, derived demand, Exchange rate, Fiscal consolidation, fiscal policy, Inflation, International reserves, monetary policy, Phillips curve, price effect, rate of return, Stabilization policy, WP
Content in this bundle
- Economic Resilience with an Exchange Rate Peg: The Barbados Experience, 1985-2000 - WP/03/168