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

Andrew Hughes Hallett, Svend E. Hougaard Jensen

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Abstract

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
Publication date2014
Publication statusPublished - 2014
EventThe 46th Annual Monetary Studies Conference - Port of Spain, Trinidad and Tobago
Duration: 18 Nov 201420 Nov 2014
Conference number: 46
http://cbes.ccmf-uwi.org/

Conference

ConferenceThe 46th Annual Monetary Studies Conference
Number46
CountryTrinidad and Tobago
CityPort of Spain
Period18/11/201420/11/2014
Internet address

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Cite this

Hallett, A. H., & Hougaard Jensen, S. E. (2014). How to Avoid a Darkening Debt Storm in the Caribbean: Lessons from the Banking Union in the Euro Area. Paper presented at The 46th Annual Monetary Studies Conference , Port of Spain, Trinidad and Tobago.