02027cas a2200241 a 4500 AALejournalIMF018515 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484361580 1018-5941 BD-DhAAL BD-DhAAL Impavido, Gregorio. Short Term Inflation Determinants in Barbados / Gregorio Impavido. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (26 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 Inflation in Barbados is mainly imported. But how are external shocks transmitted to the domestic economy? Shouldn't there be also a domestic component, albeit very small, given the presence of capital controls? We focus on short term dynamics and contribute to the existing literature in three ways: (i) we identify the process with which inflation expectations are likely to be formed in Barbados; (ii) we add forward looking inflation expectations as one of the main channels through which external monetary shocks are transmitted to the economy; and (iii) we measure the importance of domestic shocks. We find that due to the peg, forward-looking inflation expectations in the reserve currency country are an important component of the inflation expectation process in Barbados and that they are a key channel in the international monetary transmission mechanism. Domestic factors, mainly monetary shocks, also matter given the limited degree of monetary autonomy provided by capital controls. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2018/134 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/134/001.2018.issue-134-en.xml IMF e-Library