We propose an integrated fiscal and monetary approach to economic stabilisation policy in small o... more We propose an integrated fiscal and monetary approach to economic stabilisation policy in small open financially integrated economies (SOFIEs), using fiscal policy to achieve external balance at a targeted exchange rate. This approach overcomes the conundrum of the conventional Mundell-Fleming view in today's world of international financial integration, where capital controls do not insulate the small domestic economy, and where local authorities cannot be indifferent to the volatility of the exchange rate of local currency, and the potential harm to savings, investment, capital flight and domestic financial stability. In today's world, the standard prescription of flexible exchange rates and independent monetary control targeting inflation presents challenges with which SOFIEs have struggled, with little success. We describe the framework for an alternative which suits the circumstances of SOFIEs.
We propose an integrated fiscal and monetary approach to economic stabilisation policy in small o... more We propose an integrated fiscal and monetary approach to economic stabilisation policy in small open financially integrated economies (SOFIEs), using fiscal policy to achieve external balance at a targeted exchange rate. This approach overcomes the conundrum of the conventional Mundell-Fleming view in today's world of international financial integration, where capital controls do not insulate the small domestic economy, and where local authorities cannot be indifferent to the volatility of the exchange rate of local currency, and the potential harm to savings, investment, capital flight and domestic financial stability. In today's world, the standard prescription of flexible exchange rates and independent monetary control targeting inflation presents challenges with which SOFIEs have struggled, with little success. We describe the framework for an alternative which suits the circumstances of SOFIEs.
We propose an integrated fiscal and monetary approach to economic stabilisation policy in small o... more We propose an integrated fiscal and monetary approach to economic stabilisation policy in small open financially integrated economies (SOFIE’s), using fiscal policy to achieve external balance at a targeted exchange rate. This approach overcomes the conundrum of the conventional Mundell-Fleming view, in today’s world of international financial integration, where capital controls do not insulate the small domestic economy, and where local authorities cannot be indifferent to the volatility of the exchange rate of local currency, and the potential harm to savings, investment, capital flight and domestic financial stability. In today’s world, the standard prescription of flexible exchange rates and independent monetary control targeting inflation presents challenges with which SOFIE’s have struggled, with little success. We describe the framework for an alternative which suits the circumstances of SOFIE’s.
Exchange rate devaluations have been used by economies around the world in an attempt to enhance ... more Exchange rate devaluations have been used by economies around the world in an attempt to enhance their external price competitiveness. This paper evaluates the efficacy of this strategy in small-island developing states. We classify countries around the world into two broad categories, large or small according to population, land area and economic size, proxied by GDP. We compare large countries with small countries according to the following dimensions: the country’s share of world export markets, the diversity of exports of goods and services, the elasticity of import demand for consumer and producer goods, and the sensitivity of prices and wages to exchange rate changes. Using these results, we assess the efficacy of devaluation as a competitive strategy in small states as well as in larger countries. For small open economies, our findings are that exchange rate devaluations, at best, result in a redistribution of income within the country or, at worst, result in a deterioration in external competitiveness, the balance of payments, and economic contraction.
We propose an integrated fiscal and monetary approach to economic stabilisation policy in small o... more We propose an integrated fiscal and monetary approach to economic stabilisation policy in small open financially integrated economies (SOFIEs), using fiscal policy to achieve external balance at a targeted exchange rate. This approach overcomes the conundrum of the conventional Mundell-Fleming view in today's world of international financial integration, where capital controls do not insulate the small domestic economy, and where local authorities cannot be indifferent to the volatility of the exchange rate of local currency, and the potential harm to savings, investment, capital flight and domestic financial stability. In today's world, the standard prescription of flexible exchange rates and independent monetary control targeting inflation presents challenges with which SOFIEs have struggled, with little success. We describe the framework for an alternative which suits the circumstances of SOFIEs.
We propose an integrated fiscal and monetary approach to economic stabilisation policy in small o... more We propose an integrated fiscal and monetary approach to economic stabilisation policy in small open financially integrated economies (SOFIEs), using fiscal policy to achieve external balance at a targeted exchange rate. This approach overcomes the conundrum of the conventional Mundell-Fleming view in today's world of international financial integration, where capital controls do not insulate the small domestic economy, and where local authorities cannot be indifferent to the volatility of the exchange rate of local currency, and the potential harm to savings, investment, capital flight and domestic financial stability. In today's world, the standard prescription of flexible exchange rates and independent monetary control targeting inflation presents challenges with which SOFIEs have struggled, with little success. We describe the framework for an alternative which suits the circumstances of SOFIEs.
We propose an integrated fiscal and monetary approach to economic stabilisation policy in small o... more We propose an integrated fiscal and monetary approach to economic stabilisation policy in small open financially integrated economies (SOFIE’s), using fiscal policy to achieve external balance at a targeted exchange rate. This approach overcomes the conundrum of the conventional Mundell-Fleming view, in today’s world of international financial integration, where capital controls do not insulate the small domestic economy, and where local authorities cannot be indifferent to the volatility of the exchange rate of local currency, and the potential harm to savings, investment, capital flight and domestic financial stability. In today’s world, the standard prescription of flexible exchange rates and independent monetary control targeting inflation presents challenges with which SOFIE’s have struggled, with little success. We describe the framework for an alternative which suits the circumstances of SOFIE’s.
Exchange rate devaluations have been used by economies around the world in an attempt to enhance ... more Exchange rate devaluations have been used by economies around the world in an attempt to enhance their external price competitiveness. This paper evaluates the efficacy of this strategy in small-island developing states. We classify countries around the world into two broad categories, large or small according to population, land area and economic size, proxied by GDP. We compare large countries with small countries according to the following dimensions: the country’s share of world export markets, the diversity of exports of goods and services, the elasticity of import demand for consumer and producer goods, and the sensitivity of prices and wages to exchange rate changes. Using these results, we assess the efficacy of devaluation as a competitive strategy in small states as well as in larger countries. For small open economies, our findings are that exchange rate devaluations, at best, result in a redistribution of income within the country or, at worst, result in a deterioration in external competitiveness, the balance of payments, and economic contraction.
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Papers by Jamila Beckles