ECCU Business Cycles: Impact of the U.S.

April 1, 2009

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Format: Chicago

Yan M Sun, and Wendell A. Samuel ECCU Business Cycles: Impact of the U.S., (USA: International Monetary Fund, 2009) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

With a fixed peg to the U.S. dollar for more than three decades, the tourism-dependent Eastern Caribbean Currency Union (ECCU) countries share a close economic relationship with the U.S. This paper analyzes the impact of the United States on ECCU business cycles and identifies possible transmission channels. Using two different approaches (the common trends and common cycles approach of Vahid and Engle (1993) and the standard VAR analysis), it finds that the ECCU economies are very sensitive to both temporary and permanent movements in the U.S. economy and that such linkages have strengthened over time. There is, however, less clear-cut evidence on the transmission channels. United States monetary policy does not appear to be an important channel of influence, while tourism is important for only one ECCU country.

Subject: Balance of payments, Business cycles, Commodity prices, Econometric analysis, Economic growth, Financial sector policy and analysis, Prices, Remittances, Spillovers, Vector autoregression

Keywords: Business cycles, Caribbean, Central America, Commodity prices, ECCU business cycles, ECCU country, ECCU economy, ECCU growth cycle, ECCU member, ECCU sample, Linkages, Real GDP, Remittances, Spillovers, United States, Vector autoregression, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2009/071
Stock No:

WPIEA2009071
ISBN:

9781451872187
ISSN:

1018-5941

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