Date of Award

2012

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Khemraj, Tarron

Keywords

Barbbados, Foreign Exchange Rate, Currency Crisis

Area of Concentration

Economics

Abstract

Barbados has maintained a fixed exchange rate regime since July of 1975, whereas many other countries in the Caribbean and around the world have witnessed spectacular regime collapses. This thesis investigates the island's exchange rate stability by analyzing movements in macroeconomic variables to compare the economic turmoil of Barbados leading up to its most severe crisis with the experiences of three countries: Argentina, Jamaica, and Trinidad and Tobago. Barbados is found to have experienced more turmoil than Argentina and Trinidad and Tobago. This thesis offers two explanations for this finding. First, limitations of the methodology might have led to a miscalculation of the comparative economic turmoil of Barbados. Second, unique characteristics of Barbados, including island-wide support for the pegged rate and strong social cohesiveness, might have enabled the island to maintain its fixed exchange rate by allowing it to quickly implement draconian economic adjustment measures.

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