Fiscal and monetary policies in the South Pacific Island countries: an evaluation

Jayaraman, T.K.

Development Bulletin 52: 78-80

2000


PMID: 12179461
Document Number: 200335
This paper evaluates the fiscal and monetary policies of South Pacific Island Countries (SPICs) in terms of its efficacy on economic growth. To this effect, the backgrounds on the existing fiscal and monetary policies are discussed with emphasis on their inefficiencies and limitations. In addition, the findings of an empirical study conducted in the countries of Fiji, Tonga, Vanatau, and Samoa regarding the efficacy of the policies are presented. The results, which were subjected to various tests of statistical significance, indicate that both policies were ineffective in all four SPICs. However, monetary policy had a positive impact on growth in Fiji, Tonga, and Vanatau. In view of such, several policy implications are cited, including 1) that delays and inefficiencies involved in the execution of public projects should be minimized; 2) quality and components of public expenditures is of critical significance; and 3) financial sectors should be improved.

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