The Caribbean Centre for Money and Finance today announced the launch of a new publication that turns the spotlight on the behavior of prices of very specific items in an attempt to gain better insight into how prices are set.

The authors of the book, all Caribbean economists, also investigate when and why prices change, and seek to provide explanations about the nature of inflation in the Caribbean in the publication titled “Price Formation and Inflation Dynamics in the Caribbean.”

The authors use data collected for the compilation of the index of retail prices in Barbados, Curacao, Guyana, St Lucia and Trinidad and Tobago. The book is the first study of inflation which documents the specifics of price formation in this way.

The studies reported in this book seek answers to questions such as: how often are prices of particular items changed? How does the pattern differ between different products? How large are price changes on average? Are price movements symmetrical when increases are compared with decreases? Which price movements are most closely correlated with overall inflation, and to what extent do policies intended to control inflation appear to be affecting the changes in prices of individual retail items?

For further information about the book please contact Ms. Tracy Polius at Tel: (868) 645 1174 email: tracy.polius@sta.uwi.edu

In the six countries studied, the prices of food items particularly fruits and vegetables were very volatile, in many cases changing every month. At the other end of the spectrum, the prices of services tend to be quite sticky, often remaining unchanged for a year or more. In most cases, price increases were larger than price reductions, resulting in some price inflation.

The studies in this book add to our understanding of the complex process by which prices are determined, as a result of the many thousands of individual decisions, transactions and contracts for the purchase and sale of a wide variety of goods and services within Caribbean economies. A deeper understanding of economic transactions helps decision makers, in the public as well as the private sector, in formulating policies within their own sphere of activity. This book contributes to the ongoing search for deeper insight into how our economies work, as a means of better informing policy choices.

The book is edited by Dr. Roland Craigwell and Dr. Winston Moore, both lecturers within the Department of Economics, University of the West Indies, Cave Hill and Dr. DeLisle Worrell, Governor of the Central Bank of Barbados.

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