Macroeconomic and financial effects of high and volatile oil prices

This study assesses the effect of higher and more volatile oil prices on the Central American and Caribbean economies. The focus of the study is on the macroeconomic implications of higher oil prices on economic performance (output and investment growth, inflation, balance of payments), policy instruments and response (interest rates, public debt, subsidies, government expenditure), and effect on financial markets (debt maturity, composition and payments arrears). Once such effects are established, the study provides country-specific policy prescriptions based on the countries' international energy balance, and composition of their power generation structure.