Trinity Strikes Back: Monetary Independence And Inflation In The Caribbean

Serhan Cevik and Tianle Zhu

Journal of International Development, 2020, vol. 32, issue 3, 375-388

Abstract: Monetary independence is at the core of the macroeconomic policy trilemma. This study examines the relationship between monetary autonomy and inflation in Caribbean countries over the period 1980–2017. The empirical results show that greater monetary policy independence, measured as a country's ability to conduct its own monetary policy for domestic purposes independent of external monetary influences, leads to lower consumer price inflation. This relationship—robust to alternative specifications and estimation methodologies—has clear policy implications, especially for countries that maintain pegged exchange rates relative to the US dollar with a critical bearing on monetary autonomy. © 2019 John Wiley & Sons, Ltd.

Date: 2020
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https://doi.org/10.1002/jid.3457

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Working Paper: Trinity Strikes Back: Monetary Independence and Inflation in the Caribbean (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:32:y:2020:i:3:p:375-388

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