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Economic Resilience with An Exchange Rate Peg; The Barbados Experience, 1985-2000

Author

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  • Roland Craigwell
  • Kevin Greenidge
  • Harold Codrington
  • Rupert D Worrell

Abstract

This 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, and 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.

Suggested Citation

  • Roland Craigwell & Kevin Greenidge & Harold Codrington & Rupert D Worrell, 2003. "Economic Resilience with An Exchange Rate Peg; The Barbados Experience, 1985-2000," IMF Working Papers 03/168, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:03/168
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    References listed on IDEAS

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    1. Robert P Flood & Joshua Aizenman, 1992. "A Theory of Optimum Currency Areas; Revisited," IMF Working Papers 92/39, International Monetary Fund.
    2. Holder, Carlos & Worrell, DeLisle, 1985. "A model of price formation for small economies : Three Caribbean examples," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 411-428, August.
    3. Flood, Robert & Marion, Nancy, 1999. "Perspectives on the Recent Currency Crisis Literature," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 1-26, January.
    4. N/A, 1996. "Note:," Foreign Trade Review, , vol. 31(1-2), pages 1-1, January.
    5. Michael Kumhof, 2002. "A Critical View of Inflation Targeting: Crises, Limited Sustaintability, and Aggregate Shocks," Central Banking, Analysis, and Economic Policies Book Series,in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Inflation Targeting: Desing, Performance, Challenges, edition 1, volume 5, chapter 8, pages 349-394 Central Bank of Chile.
    6. Boamah, Daniel & Craigwell, Roland, 1993. "Substitution possibilities between imports and traditional factors of production for a small open economy," The North American Journal of Economics and Finance, Elsevier, vol. 4(2), pages 211-223.
    7. Peter Isard & Hamid Faruqee, 1998. "Exchange Rate Assessment; Extension of the Macroeconomic Balance Approach," IMF Occasional Papers 167, International Monetary Fund.
    8. Karl F Habermeier & Mario M Mesquita, 1999. "Long-Run Exchange Rate Dynamics; A Panel Data Study," IMF Working Papers 99/50, International Monetary Fund.
    9. Jason Furman & Joseph E. Stiglitz, 1998. "Economic Crises: Evidence and Insights from East Asia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 1-136.
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    Citations

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    Cited by:

    1. Winston Moore & Adrian Glean, 2016. "Foreign exchange reserve adequacy and exogenous shocks," Applied Economics, Taylor & Francis Journals, vol. 48(6), pages 490-501, February.
    2. Khemraj, Tarron & Pasha, Sukrishnalall, 2011. "Monetary sterilization and dual nominal anchors: some Caribbean examples," MPRA Paper 34503, University Library of Munich, Germany.
    3. Winston Moore & Marlon Williams, 2008. "Evidence on the sectoral monetary transmission process under a fixed exchange rate regime," International Economic Journal, Taylor & Francis Journals, vol. 22(3), pages 387-398.
    4. Keyra Primus, 2016. "The Effectiveness of Monetary Policy in Small Open Economies; An Empirical Investigation," IMF Working Papers 16/189, International Monetary Fund.
    5. Eduardo Wiesner, 2008. "The Political Economy of Macroeconomic Policy Reform in Latin America," Books, Edward Elgar Publishing, number 12913.

    More about this item

    Keywords

    Barbados; Caribbean; Stabilization policy; Monetary policy; Foreign exchange; Exchange rate; central bank; inflation; foreign exchange reserves;

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