International Monetary Fund. Western Hemisphere Dept.
Aruba managed to contain the pandemic in the first months of the outbreak but experienced a resurgence of new infections in the summer. The economic impact of COVID-19 is particularly severe given Aruba’s high dependency on tourism. While the authorities’ swift response has helped contain the human and economic damage, it could not avoid a severe GDP contraction.
Monetary independence is at the core of the macroeconomic policy trilemma stating that an independent monetary policy, a fixed exchange rate and free movement of capital cannot exist at the same time. This study examines the relationship between monetary autonomy and inflation dynamics in a panel of Caribbean countries over the period 1980–2017. The empirical results show that monetary independence is a significant factor in determining inflation, even after controlling for macroeconomic developments. In other words, greater monetary policy independence, measured as a country’s ability to conduct its own monetary policy for domestic purposes independent of external monetary influences, leads to lower consumer price inflation. This relationship—robust to alternative specifications and estimation methodologies—has clear policy implications, especially for countries that maintain pegged exchange rates relative to the U.S. dollar with a critical bearing on monetary autonomy.
This Selected Issues paper describes the revenue instability and its consequences for Suriname. It explores some options for policy rules that could be considered in the case of Suriname. The paper analyzes inflation in Suriname from its historical and international perspectives, reviews the monetary policy instruments and the institutional framework, and describes the exchange rate regime and its main developments. The paper also analyzes the type of macroeconomic shocks and the domestic transmission mechanism for Suriname.
This paper describes economic developments in Kingdom of the Netherlands—Aruba during the 1990s. During 1993–94, Aruba’s economic expansion continued at a brisk pace, albeit somewhat slower than the very high rates of growth attained during the late 1980s. Growth was mainly supported by private domestic demand, with both the consumption and investment components contributing significantly, while the contribution of the external sector turned negative. This strong growth in domestic demand exacerbated the already severe supply constraints of the Aruban economy, resulting in very tight labor market conditions and an acceleration of inflation.