What Do Demand and Supply Shocks Say About Caribbean Monetary Integration?

Abstract

This study seeks to ascertain whether the member states of the Caribbean Community (CARICOM) share similar supply and demand shocks. If so, an argument can be made for the suitability of said countries being part of a currency union. The results show that no significant correlation exists for the majority of countries studied, and as such no economic justification for the monetary union can be made based on the methodology used. However, the Eastern Caribbean Currency Union (ECCU), whose members are a part of CARICOM, is supported by the results.