Convergence in the Eastern Caribbean States

Abstract

We examine absolute (sigma) and conditional (beta) convergence among selected members of the Eastern Caribbean Central Bank (ECCB). With the countries sharing the same monetary policy, we expect high rates of income convergence. While the ECCB members fail to converge absolutely, two convergence groups appear to form, implying different steady states. Employing panel data methods under different control variables, we find that conditional convergence is occurring for the whole group at a rate at least twice of the large sample of countries found in the literature. We interpret this result as a possible consequence of membership in the ECCB.