Cover IMF Working Papers
Buy Book in Print
Estimating the Impact of External Shocks on the ECCU: Application to the COVID Shock
Author:
Vivian Parlak null

Search for other papers by Vivian Parlak in
Current site
Google Scholar Close
,
Mr. Gonzalo Salinas
Search for other papers by Mr. Gonzalo Salinas in
Current site
Google Scholar Close
, and
Mr. Mauricio Vargas null

Search for other papers by Mr. Mauricio Vargas in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 218
Language:
English
Publication Date:
20 Aug 2021
DOI:
https://doi.org/10.5089/9781513585413.001
ISBN:
9781513585413
ISSN:
1018-5941
Pages:
37
Keywords:
FDI windfall; passport sale; ECCU economy; shocks lead; tourism shock; Oil prices; Tourism; Foreign direct investment; Current account balance; Natural disasters; Global; Caribbean
Legal-disclaimer:
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.
Download PDF (2.2 MB) Download Epub
We measure the impact of frequent exogeneous shocks on small ECCU economies, including changes to global economic activity, tourism flows, oil prices, passport sales, FDI, and natural disasters. Using Canonical-Correlation Analysis (CCA) and dynamic panel regression analysis we find significant effects of most of these shocks on output, while only fluctuations in oil prices have significant effects on inflation. Results also suggest a significant impact of FDI and passport sales on the external balance, a link that CCA identifies as the strongest among all analyzed relations. The model also shows how Covid-19 related shocks lead to substantial contractions in output in all ECCU countries and deterioration of the current account balance in most of them, depending on countries’ tourism dependency.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund