Price Dynamics in the Eastern Caribbean

Author/Editor:

Rupa Duttagupta ; Yan Sun

Publication Date:

April 1, 2008

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The Eastern Caribbean Currency Union (ECCU) countries share a common currency, the EC dollar, which has been pegged to the U.S. dollar at the same rate for more than three decades. This paper examines the influence of the peg on ECCU price stability, and analyzes whether absolute Purchasing Power Parity (PPP) holds within the currency union. It shows that U.S. price stability has helped anchor price movement in the ECCU. As the same time, inflation in the ECCU is not entirely imported from the U.S., and has some domestic policy content. In addition, deviation from PPP within the ECCU can be attributed to persistent price dispersion of nontradables.

Series:

Working Paper No. 08/90

Subject:

English

Publication Date:

April 1, 2008

ISBN/ISSN:

9781451869514/1018-5941

Stock No:

WPIEA2008090

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

21

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