We are unable to display your institutional affiliation without JavaScript turned on.
Browse Book and Journal Content on Project MUSE

Find using OpenURL

Is The Eastern Caribbean Currency Union an Optimum Currency Area?

From: The Journal of Developing Areas
Volume 48, Number 1, Winter 2014
pp. 291-313 | 10.1353/jda.2014.0009



Throughout the turbulence in the international financial system, eastern Caribbean countries have enjoyed remarkable monetary and economic stability. This paper attempts to characterize the types of structural shocks in the Eastern Caribbean Currency Union (ECCU) and other countries in the region and compare them with other currency unions such as the African Financial Community (CFA) franc zone and the Eurozone. Mundell’s criteria on the optimum currency area (OCA) are examined by using a 2-variable structural vector autoregressive (SVAR) model and estimating the extent of symmetric shocks. We find that the role of regional shocks in explaining domestic outputs among the ECCU countries is comparable to that of the EMU countries and much higher than that of the non-ECCU countries in the same region or the CFA franc zone countries. This suggests that the ECCU countries are structurally similar to each other and thus more likely to be subject to symmetric shocks. Their monetary and exchange arrangements appear to have well served the region and the group of countries satisfies most of the criteria to be categorized as an optimum currency area.

You must be logged in through an institution that subscribes to this journal or book to access the full text.


Shibboleth authentication is only available to registered institutions.

Project MUSE

For subscribing associations only.