Does Demand Volatility Lower Growth and Raise Inflation?: Evidence from the Caribbean

The paper investigates asymmetry in the allocation of aggregate demand shocks between real output growth and price inflation over the business cycle in a sample of fifteen Caribbean countries. In most countries, the evidence indicates the existence of structural constraints, implying that positive d...

Full description

Saved in:
Bibliographic Details
Main Author: Kandil, Magda E. (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2014
Series:IMF Working Papers Working Paper No. 14/67
Online Access:UBW01
UEI01
LCO01
SBR01
UER01
SBG01
UBG01
FAN01
UBT01
FKE01
UBY01
UBA01
FLA01
UBM01
UPA01
UBR01
FHA01
FNU01
BSB01
TUM01
Volltext
Summary:The paper investigates asymmetry in the allocation of aggregate demand shocks between real output growth and price inflation over the business cycle in a sample of fifteen Caribbean countries. In most countries, the evidence indicates the existence of structural constraints, implying that positive demand shocks feed predominantly into prices while negative demand shocks mainly affect output. The high variability of aggregate demand in Caribbean countries, frequently exposed to shocks that are exacerbated by pro-cyclical policy stance, tends to create an upward bias on inflation and a downward bias on real output growth, on average, over time. The analysis highlights the benefits of eliminating structural rigidities responsible for asymmetric real and inflationary effects and points to the dangers of procyclical macroeconomic policies that exacerbate the adverse effects of demand variability
Physical Description:1 Online-Ressource (34 p)
ISBN:1484359674
9781484359679

There is no print copy available.

Interlibrary loan Place Request Caution: Not in THWS collection! Get full text