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ECCU Business Cycles: Impact of the U.S.
Author: Ms. Yan M Sun and Mr. Wendell A. Samuel
Series:
IMF Working Papers
Volume/Issue:
Volume 2009: Issue 071
Language:
English
Publication Date:
01 Apr 2009
DOI:
https://doi.org/10.5089/9781451872187.001
ISBN:
9781451872187
ISSN:
1018-5941
Pages:
23
Keywords:
WP; ECCU country; real GDP; Business cycles; linkages; Caribbean; United States; ECCU economy; ECCU growth cycle; ECCU business cycles; ECCU sample; ECCU member; Vector autoregression; Spillovers; Commodity prices; Remittances; Central America
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund