Jel Classification
C32, F15
N° Pages
Convergence of inflationary shocks: evidence from the Caribbean

In this paper we aim to shed some light on the inflation dynamics in the
Caribbean. We analyse the inflation rates for twelve countries using various
time series methods. The results show that the inflation rates are mean
reverting processes and that there is evidence of a convergence club in
inflation rates within the area, which contradicts previous studies. Our
contribution implies a high degree of similarity in the dynamics of our
target countries’ inflation rates.

Caribbean, inflation persistence, monetary union and unit roots