Any consideration of a return to a peg by Jamaica is not an exercise in textbook abstraction nor can it be the result of a simple comparison of Jamaica and Barbados in 2010. A fuller historical comparative analysis will conclude that stronger macroeconomic results in Barbados are due to greater sustained commitment to fiscal prudence that also guaranteed the preservation of peg and parity.
The Jamaican Economy in a dollarised situation, using the US Dollar as the anchor currency, would adopt conditions conducive to economic stability and growth. However, fundamental change in the current arrangement may be premature at this stage.
What we are witnessing in Jamaica today is really a ‘recession within a recession.’ In the past decade Jamaica has only been able to muster a paltry 1.4 % average annual economic growth due largely to a weak macroeconomic multiplier and high levels of import in relation to GDP. Achieving higher growth rates with stability will require transforming the pool of unemployed into a productive force with an export focus; embracing innovation, quality and productivity; a renaissance of the ideas of Lewis and proponents of Plantation Economy theory; and the exploration of new ideas.
Edward Seaga makes a compelling case for a pegged rate, that is, “a fixed currency value accepted or legislated as non-variable. Pegged rates can last decades without change, as has been the case in the Organization of Eastern Caribbean States.”...
Colin Bullock argues that the “reintroduction of a peg would have to weigh the issue of capital controls” and could also mean “neutering the significant technical expertise in money and foreign exchange policy that has been developed at the Bank of Jamaica”....
Any consideration of a return to a peg by Jamaica is not an exercise in textbook abstraction nor can it be the result of a simple comparison of Jamaica and Barbados in 2010. A fuller historical comparative analysis will conclude that stronger macroeconomic results in Barbados are due to greater sustained commitment to fiscal prudence that also guaranteed the preservation of peg and parity.
The Jamaican Economy in a dollarised situation, using the US Dollar as the anchor currency, would adopt conditions conducive to economic stability and growth. However, fundamental change in the current arrangement may be premature at this stage.
What we are witnessing in Jamaica today is really a ‘recession within a recession.’ In the past decade Jamaica has only been able to muster a paltry 1.4 % average annual economic growth due largely to a weak macroeconomic multiplier and high levels of import in relation to GDP. Achieving higher growth rates with stability will require transforming the pool of unemployed into a productive force with an export focus; embracing innovation, quality and productivity; a renaissance of the ideas of Lewis and proponents of Plantation Economy theory; and the exploration of new ideas.