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This paper analyzes the way in which Barbados, Jamaica and Trinidad and Tobago neutralized the changes in international reserves due to different external shocks from 1969 to 1986. The economies of Trinidad and Barbados, which different external conditions, were found to be able to neutralize these external shocks (Trinidad through substantial fiscal deficits and Barbados by developing its banking system, maintaining stable monetary coefficients and conservative fiscal policies). Both avoided monetization and major fluctuations in their money supply. Jamaica, which is a diversified economy with serious external debt problems and deteriorating terms of trade, followed a very expansionist fiscal policy during the 70's; however, it has been able to neutralize external shocks to a great extent, compensating the fall in its external net assets with an increase in net government bonds. The indicators of development in the financial sector used for the analysis show that the financial systems of Barbados and Jamaica are comparable to those in major semi-industrial countries, but the banking sector in Trinidad is not as developed. [ABSTRACT FROM AUTHOR]

This paper describes the characteristics of the regional model of monetary and financial cooperation in Latin America and the Caribbean, which form the summary of the efforts realized for that purpose by the regional authorities during the last thirty years. The regional experiences on sustaining mechanisms for the balance of payments show in general a limited capacity of resources and an acceptable operating development. Among these models, the Andean Reserves Fund is the subregional organism which has been more successful in its institutional development. The data presented here prove the will of searching financial mechanisms of regional cooperation which may sustain the economic integration processes. Nevertheless, the account presented here is rich in cases where the possibilities of success of these efforts depends on the political will of the concerned governments. [ABSTRACT FROM AUTHOR]

The object of this research is to explain the financial crisis occurred in Mexico between 1976 and 1982, by analyzing the portfolio decisions of the private sector as well as the increase in liquidity in the economic system. These two aspects have been linked to fiscal, exchange rate, and interest rate policies through a monetary model designed by Girton and Roper (1977) characterizing the "pressure in the exchange market. " The paper is divided into four chapters, the first of which deals with the development of the theoretical framework starting with the first studies that established a relationship between the money market and the balance of payments, and ending with the Girton and Roper model. The second chapter offers an analysis of the economic policies implemented in the country, focusing on fiscal policy, exchange rates, devaluation expectations and substitution among financial assets by individuals. The analysis of the different monetary demand equations adapted to the available data is carried out in the third chapter. The econometric work concentrates on the introduction of expected variables (income, interest rates, and inflation), to estimate the demand for money, foreign exchange attraction, and deposits in the United States. Brief conclusions are presented in the fourth chapter. This research provides results that differ from those in other similar studies regarding the importance of expected devaluations in portfolio decisions by individuals and, consequently, in international reserves and the exchange rates. The results suggest the importance of maintaining an exchange rate that will not generate expectations of devaluation and that, in financing the public deficit, will not provoke an immediate increase in liquidity. [ABSTRACT FROM AUTHOR]