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Vivian Parlak, Mr. Gonzalo Salinas, and Mr. Mauricio Vargas
We measure the impact of frequent exogeneous shocks on small ECCU economies, including changes to global economic activity, tourism flows, oil prices, passport sales, FDI, and natural disasters. Using Canonical-Correlation Analysis (CCA) and dynamic panel regression analysis we find significant effects of most of these shocks on output, while only fluctuations in oil prices have significant effects on inflation. Results also suggest a significant impact of FDI and passport sales on the external balance, a link that CCA identifies as the strongest among all analyzed relations. The model also shows how Covid-19 related shocks lead to substantial contractions in output in all ECCU countries and deterioration of the current account balance in most of them, depending on countries’ tourism dependency.
Vivian Parlak, Mr. Gonzalo Salinas, and Mr. Mauricio Vargas

2014–15 3. Impact of FDI Windfall in Early 2000s 4. Impact of Storm Erika (2015) and Hurricane Maria (2017) in Dominica 5. Impact of CBI Windfall in St. Kitts and Nevis 6. Problem Setup 7. Selected Dynamic Multipliers ANNEXES I. Econometric Results 1 The athors would like to thank Luiggi Silva and Raadhika Vishvesh for excellent research assistance, as well as Sonia Munoz and staff at the WHDC1 division of the International Monetary Fund for highly valuable comments.

Vivian Parlak, Mr. Gonzalo Salinas, and Mr. Mauricio Vargas

. This partly contributed to an overall acceleration in economic activity in the first years of the 2000s. Nonetheless, there were likely other contributing factors related to the upswing in the global economy during those years. Figure 3. Impact of FDI Windfall in Early 2000s D. Natural Disasters We can most dramatically appreciate the economic impact of natural disasters by observing the aftermath in Dominica of the 2015 Tropical Storm Erika and 2017 category 5 Hurricane Maria. While these two events substantially affected economic activity, the