Abstract
Eastern Caribbean Small Island Developing States (SIDS) have a high dependence on international trade for income, employment, and poverty reduction given their extreme openness, small market size, narrow range of resources, and productive capabilities and specialized economic structures. These features make them vulnerable to external shocks, the most frequent being tropical storms. The objective of this paper is to investigate the impact of tropical storms on international trade for 8 Eastern Caribbean SIDS over the period 2000-2019, as well as the mediating role of the Real Effective Exchange Rate (REER). The paper uses panel regression techniques along with mediation analysis applied to monthly export, import, and exchange rate data taken from the Eastern Caribbean Central Bank combined with a measure of hurricane destruction that accounts for ex-ante economic exposure to damage. The results indicate that hurricanes reduce exports of goods by 20 percent in the month of a strike and up to three months thereafter. The impact on imports is more immediateand less severe, reducing imports of goods by 11 per cent only in the month of a strike. The mediation analysis suggests that the REER plays no mediation role in explaining the impact of tropical storm damage on exports and imports in the region.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.