Short Term Inflation Determinants in Barbados
IMF Working Papers, June 13, 2018
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- Canonical URL
- Short Term Inflation Determinants in Barbados
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Bibliographic details
- Authors: Gregorio Impavido
- Published: June 13, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484361580.001
Summary
- Publication title: Short Term Inflation Determinants in Barbados
- Author: Gregorio Impavido
- Date: June 13, 2018
- Type: IMF Working Papers, Working Paper No. 2018/134, Issue: 134, Volume: 2018
- Pages: 26
- DOI: https://doi.org/10.5089/9781484361580.001
- Stock No: WPIEA2018134
- ISBN: 9781484361580
- ISSN: 1018-5941
Research focus and contributions
- Focus: Short-term dynamics of inflation in Barbados and the transmission of external shocks to the domestic economy.
- Main contributions:
- (i) Identify the process with which inflation expectations are likely to be formed in Barbados.
- (ii) Add forward looking inflation expectations as one of the main channels through which external monetary shocks are transmitted to the economy.
- (iii) Measure the importance of domestic shocks.
Key findings
- Inflation in Barbados is mainly imported.
- Due to the peg, forward-looking inflation expectations in the reserve currency country are an important component of the inflation expectation process in Barbados.
- Forward-looking inflation expectations are a key channel in the international monetary transmission mechanism for Barbados.
- Domestic factors, mainly monetary shocks, also matter given the limited degree of monetary autonomy provided by capital controls.
Subjects and keywords (as listed)
- Subjects: Food prices, Import prices, Inflation, International trade, Oil prices, Prices, Terms of trade
- Keywords: Barbados, capital controls, exchange rate, Food prices, Global, headline inflation, Import prices, inflation, inflation difference equation, inflation expectation, inflation expectations number, inflation underestimation, monetary transmission, Oil prices, output gap, pegged exchange rate, reviews inflation dynamics, Terms of trade, WP
Policy implications (inferred from findings)
- The peg and international monetary conditions imply that policy-makers in Barbados should monitor forward-looking inflation expectations in the reserve currency country as part of domestic inflation management.
- Capital controls provide a limited degree of monetary autonomy, so domestic monetary shocks remain relevant for short-term inflation and should be considered in policy design.
Source: Short Term Inflation Determinants in Barbados, Gregorio Impavido; IMF Working Papers, Working Paper No. 2018/134; June 13, 2018; DOI: https://doi.org/10.5089/9781484361580.001
Content in this bundle
- Short Term Inflation Determinants in Barbados, WP/18/134, June 2018