MONETARY POLICY AND DEFICITS FINANCING IN JAMAICA

Edward Ghartey ()

Journal of Economic Development, 2003, vol. 28, issue 1, 81-99

Abstract: A vector error-correction model (VECM) is estimated to examine the relationship among interest rates, monetary base, credit claims to the private sector, real income, prices, government spending, budget deficits and exchange rate in Jamaica. Cointegration is used to identify the VECM. The empirical results show that fiscal deficits are monetized in the long-run; the roles of financial services are weak, and inverse price-real output relationship exists in both the short-run and the long-run. Monetary disciplines, reduction in fiscal spending and sound regulatory actions are crucial to reduce the national debt, the inflation and interest rates, crowd in private investments, avert financial crisis and promote economic growth.

Keywords: Vector Error-correction Model; Fiscal Spending; Financial Services; Deficit Finance; and Jamaica (search for similar items in EconPapers)
JEL-codes: E6 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.jed.or.kr/full-text/28-1/Ghartey.PDF (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:28:y:2003:i:1:p:81-99

Access Statistics for this article

Journal of Economic Development is currently edited by Sung Y. Park

More articles in Journal of Economic Development from Chung-Ang Unviersity, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sung Y. Park ().