A Currency Union for the Caribbean

Rupert Worrell

No 2003/035, IMF Working Papers from International Monetary Fund

Abstract: The experiences of Caribbean Economic Community countries show that exchange rate depreciation in these countries is inflationary, and that, while changes in the relative prices of tradables may affect exports, tourism, and imports, nominal exchange rate changes have no predictable effect on those relative prices. Under these circumstances, economic literature indicates that a fixed exchange rate regime is optimal, and Caribbean countries with (quasi-) currency boards have been successful in maintaining durable exchange rate pegs. Commitment to a currency board is a potentially vital step in achieving a currency union for the Caribbean.

Keywords: WP; exchange rate; currency; dollar; exchange rate change; common currency; Currency Board; Dollarization; Caribbean; current account; board strategy; quasi-currency board; exchange rate crisis; quasi-currency board rules; board rule; currency board rule; currency risk; board regime; single market; Exchange rates; Exchange rate adjustments; Currencies; Monetary unions; Global (search for similar items in EconPapers)
Pages: 35
Date: 2003-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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