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Mr. Paul Cashin and Mr. Antonio Lemus
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.
Antonio Lemus and and Mr. Paul Cashin

buffer as compared with complete self-insurance. This paper aims to: (i) identify the type of shocks affecting ECCU-member countries; (ii) ascertain whether asymmetric and temporary shocks are an important source of risk for ECCU members; (iii) study whether a hypothetical Eastern Caribbean fiscal insurance mechanism could insure its members against asymmetric income shocks; and (iv) calculate the impact of shocks on disposable income per capita. In doing so, we replicate the analysis of Cohen and Wyplosz (1989) , run regressions in levels between the changes in

International Monetary Fund. Western Hemisphere Dept.
This IMF Staff Report for the 2016 Discussion on Common Policies of Eastern Caribbean Currency Union (ECCU) Member Countries highlights that the regional recovery in ECCU is gaining ground, supported by continued low oil prices, strong tourism arrivals, and robust citizenship-by-investment receipts. Risks to the near-term outlook are balanced, but growth in the ECCU continues to be hindered by weak competitiveness, banking sector fragilities, susceptibility to natural disasters, and large public debt. The Executive Directors have encouraged the authorities to press ahead with sound macroeconomic policies and structural reforms to decisively address these issues and strengthen the conditions for robust long term growth.
Phebby Kufa, Mr. Anthony J. Pellechio, and Saqib Rizavi

and Debt, 1991–2002 (In percent of GDP) Sources: ECCU member country authorities; and IMF staff estimates Fiscal deterioration in ECCU countries may have been attenuated by their membership in a monetary union. This deterioration was not accompanied by inflation, a depreciating exchange rate, or higher interest rates, thereby insulating member countries from the incentives for fiscal discipline. The lack of direct monetary financing was compensated by both domestic and external financing, including recourse to commercial borrowing. This choice of financing

Mr. Anthony J. Pellechio, Saqib Rizavi, and Phebby Kufa
The fiscal position of the Eastern Caribbean Currency Union (ECCU) has deteriorated significantly in recent years, resulting in sharp increases in public debt. The sustainability of public debt is examined using the public sector budget constraint to derive the maximum public-debt-to-GDP ratio that can be sustained based on a country's projected steady-state primary balance, interest rate on public debt, and economic growth rate. In this context, government deficits and debt in several ECCU member countries appear unsustainable, posing a risk to the stability of the currency union. A critical issue facing member countries is to implement fiscal policies consistent with sustainable public finances and debt to underpin the currency union.
International Monetary Fund. Western Hemisphere Dept.

. The containment measures allowed for the first wave of the pandemic to be reasonably well-contained, with relatively low levels of infections and deaths. However, as borders were reopened and global infections increased, the number of cases rose and eventually led to a re-implementation of containment measures. As early as March 2020, several measures were implemented in ECCU member countries to mitigate the impact of the pandemic . These included increased health care spending, cash payments to vulnerable households, income support for displaced workers in the