How to Avoid a Darkening Debt Storm in the Caribbean: Lessons from the Banking Union in the Euro Area?

Svend E. Hougaard Jensen, Andrew Hughes Hallett

Research output: Chapter in Book/Report/Conference proceedingBook chapterResearchpeer-review


Using the euro area and the Eastern Caribbean Currency Union as case studies, this chapter argues that a comprehensive policy framework should comprise not only a rule for fiscal policy but also, and equally important, a broader set of strategies designed to improve competitiveness and economic growth. Specifically, we stress the need to prevent a build-up of debt, public and private, by introducing a mechanism to ensure that public and private borrowing is consistent with an overall macroeconomic strategy. This introduces elements of a banking union framework, tied into Europe's notion of a fiscal and competitiveness compact. We use this framework to show how different policy institutions can retain different priorities in their own economies, and hence individual policies that are internally consistent, while also maintaining a degree of flexibility that allows them to deal with problems as they arise.
Original languageEnglish
Title of host publicationFiscal Policy : International Aspects, Short and Long-Term Challenges and Macroeconomic Effects
EditorsC. Amo-Yartey
Number of pages23
Place of PublicationNew York
PublisherNova Science Publishers
Publication date2015
ISBN (Print)9781634824088
ISBN (Electronic)9781634824224
Publication statusPublished - 2015

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