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Private Consumption Expenditure in the Eastern Caribbean Currency Union

Sutherland, Richard and Craigwell, Roland (2011): Private Consumption Expenditure in the Eastern Caribbean Currency Union. Forthcoming in:

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Abstract

This paper innovates by being the first to estimate a consumption function of a monetary union as a single entity. It is also the first empirical consumption research on the Eastern Caribbean Currency Union (ECCU). Due to the open nature of these nations it further adds to the literature by examining open economy variables like the terms of trade and the degree of export orientation. The panel dynamic least squares method employed indicates that private spending is primarily driven by income, financial wealth, the interest rate, terms of trade and the degree of export orientation.

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