ISSN:
Volume 10, Number 2 (2005)
Is a Monetary Union in CARICOM Desirable?
Olivier Manioc, Jean Montauban
The aim of this paper is to evaluate the opportunity of a monetary unification between CARICOM states. We structure our ideas around three main issues. The first one will describe CARICOM and the potential advantages of a monetary union. Emphasis will be placed on the actual trade policies in these states. It is widely accepted that the adoption of a single currency would favour trade, allowing an optimum assignment of the factors of production and increase welfare. Secondly, considering all these a priori, we will put our interest in trade potentials between these countries, comparing their degree of economic specialisation. Finally, we will undertake some econometrics tests, which will allow us to examine the efficiency of a monetary union between CARICOM states.