This Selected Issues paper analyzes macroeconomic fluctuations in the Eastern Caribbean Currency Union (ECCU). The paper describes data, along with the estimation technique used to ensure stationarity of the data. The empirical regularities of macroeconomic fluctuations in the ECCU are described, examining the relationship between a set of macroeconomic time series and domestic output, for each of the six IMF members of the ECCU. The paper also explores the determinants of macroeconomic volatility in the ECCU.
This Selected Issues paper on the Eastern Caribbean Currency Union (ECCU) underlies key features of business cycles. To obtain new measures of classical and growth cycles, simple rules were applied to date turning points in the classical business cycle, and a recently developed frequency domain filter was used to estimate the growth cycle. At the regional level, the ECCU countries are facing two shocks, i.e., the depreciation of the U.S. dollar and the depreciation of the Dominican Republic’s peso. The countries of the ECCU have experienced modest erosion in their price and nonprice competitiveness.
This 2001 Article IV Consultation highlights that in recent years, economy of St. Vincent and the Grenadines has diversified from bananas into services, mainly tourism, telephone and Internet-based marketing, and offshore financial services. However, the rate of economic growth declined sharply to 2 percent in 2000. The external current account deficit is estimated to have doubled to about 16½ percent of GDP in 2001 largely owing to a decline in banana export volumes, higher imports, and a slowdown in tourism receipts and remittances.