1887

Economic Policies in Small Open Economies

Prospects for the Caribbean

image of Economic Policies in Small Open Economies

This study deals with some of the major issued discussed at a symposium entitled “Small States: Problems and Opportunities in a World of Rapid Change”, which was held in March 1991 in St Kitts and Nevis. The symposium focused on the special problems confronting the management and development of small states’ economies.



The study, prepared by Delisle Worrell, Deputy Governor of the Central Bank of Barbados, argues that the economic adjustment strategies adopted by many Caribbean economies in the 1980s were in appropriate in trying to restore external balance and raise economic output. The analysis pays particular attention to the economic adjustment strategies of Barbados, the Dominican Republic, Guyana, Jamaica and Trinidad and Tobago. To improve the performance of Caribbean economies, the author calls for a better mix of stabilisation policies with a deliberate export promotion strategy.

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Exchange Rate Issues

We find it useful to employ the term “nominal exchange rate” to refer to the rate at which an average citizen carries out foreign transactions. That rate is endogenous for small open economies and depends on the reserve level and the demand and supply of foreign exchange. The nominal rate is to be distinguished from the official exchange rate.

English

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