01967cas a2200241 a 4500 AALejournalIMF014357 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484359679 1018-5941 BD-DhAAL BD-DhAAL Kandil, Magda. Does Demand Volatility Lower Growth and Raise Inflation? : Evidence from the Caribbean / Magda Kandil. Washington, D.C. : International Monetary Fund, 2014. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper investigates asymmetry in the allocation of aggregate demand shocks between real output growth and price inflation over the business cycle in a sample of fifteen Caribbean countries. In most countries, the evidence indicates the existence of structural constraints, implying that positive demand shocks feed predominantly into prices while negative demand shocks mainly affect output. The high variability of aggregate demand in Caribbean countries, frequently exposed to shocks that are exacerbated by pro-cyclical policy stance, tends to create an upward bias on inflation and a downward bias on real output growth, on average, over time. The analysis highlights the benefits of eliminating structural rigidities responsible for asymmetric real and inflationary effects and points to the dangers of procyclical macroeconomic policies that exacerbate the adverse effects of demand variability. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2014/067 Full text available on IMF http://elibrary.imf.org/view/journals/001/2014/067/001.2014.issue-067-en.xml IMF e-Library