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The MIRAB model offers an explanation of the evolution and operation of some tiny Pacific island economies. Proponents of the model have argued that it describes an economic system that is durable and persistent. Using an historical approach, this paper explores whether and how an economy of the MIRAB type can break out of its structural mould without regressing to an earlier stage of development. After establishing that Norfolk Island possessed strong MIRAB characteristics from the end of World War II until the early 1960s, the paper analyses the tourism-dominated economic growth that erased these characteristics, or at least reduced them to insignificance. It concludes that the island has achieved a sustained break-out from the MIRAB mould, although not without incurring some social costs.

This paper was stimulated by discussions with W . M. Corden. For helpful comments on an earlier version. we also wish to thank D. C. Rowan. and participants in a seminar at the University of New England. especially J. C. Baldry and B. F. Reece. We are also grateful for the services of an anonymow referee.'The earliest description of this curve that we have found is in Brownlee 131. The first textbook to employ I t appears to have been McKenna [17]. 37

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A currency board is a monetary authority that issues and redeems domestic currency on demand against a specified foreign currency at a fixed rate of exchange, while holding foreign currency reserves equal to at least 100 per cent of its issue of domestic currency. Unlike a central bank, a currency board is not permitted to buy or sell domestic assets such as government bonds so that, in effect, changes in the monetary base are solely the result of (and equal to) imbalances between the country's international receipts and payments.Common in colonial territories in the first half of the twentieth century, currency boards were largely replaced by central banks in the post-war era of decolonisation. In the 1990s, however, new currency boards emerged first in Argentina and then in some of the smaller economies of Eastern Europe. Their emergence has prompted renewed discussion of the advantages and disadvantages of currency boards. 2 1 The author wishes to acknowledge the helpful comments of Peter Drake, the late Heinz Arndt and an anonymous referee.