A model of output, wages, prices and productivity in Barbados

The peculiar macroeconomic characteristics of small open economies, such as Barbados, result in economic processes differing generically from those in the developed nations. This paper develops a small aggregate model of Barbados and utilises recent developments in econometrics by way of cointegration theory to incorporate system dynamics in a version of the static model of the Barbadian economy developed by Holder-Worrell and Boamah (1984). The paper presents a summary of the model. Time empirical results are discussed, and conclusions and directions of future research are stated in the final section