Working Papers

The Development Mandate of the Central Bank in the Small Open Economy

This paper makes the case for a central bank mandate that includes the mobilization of finance for growth in small open economies. I draw on the literature analyzing the performance of the “Asian Tigers” and the more recent literature on the entrepreneurial state to show that innovation costs are a barrier to investment and growth in export-led economies. The state plays an essential role in subsidizing the return on innovation to increase it to an internationally competitive rate. It falls naturally to the central bank to mobilize the finance for this state subsidy.

Reflections on the Modelling of Caribbean Economies

This paper is a survey and assessment of a selection of economic models that are found in the Caribbean, chosen from two traditions of modelling: one, the medium/long term genre that has its roots in the work of Harrod and Domar, and the other, structural equation models in the Wharton/Cowles Commission tradition.

A Practical Policy Model of the Small Open Economy, with Applications

Very small economies may achieve high levels of development, as evidenced by Iceland and Mauritius, notwithstanding the facts of their high import dependence, limited capacity for export diversification, open financial markets and susceptibility to external shocks. This paper explains how unorthodox fiscal and monetary policies may be employed to ensure stability and maintain competitiveness and growth in the face of oil price shocks, the impact of natural disasters, capital flight and contraction in foreign investment, in countries characterised by this economic structure.

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