Arguably, expansionary fiscal policy was the primary reason
for the relatively quick rebound in global economic growth
since the deep recession of 2008. Indeed, it seemed as
though the crisis was unresponsive to the aggressive easing
of monetary policy which was actually the first line of defense
for several countries. One of the major reasons for that was
waning consumer and business confidence, so that even
though interest rates fell to record low levels, spending and
investments were held back, simply because expectations
dictated that the economic situation would get worse. For this
reason, governments throughout the world were forced to
boost expenditure to help anchor short-term expectations and
improve sentiment.
Did the free-market fail in this instance? Was Keynes
therefore correct in his postulations? Keynesian economic
school of thought advocates a mixed economy, which is
a hybrid combination of aspects from the pure market
(Laissez‑faire) and the command (socialist) economies,
principally private sector, but with a role for government
intervention to stabilize the business cycle.
Our next special feature article highlights the role of
government in developing the capital markets. The CEO and
General Manager of the Trinidad and Tobago Stock Exchange,
Mr. C. Wainwright Iton, analyses how governments, by
reducing their ownership in key sectors, can help develop the
capital markets in the Caribbean region.
Economic systems and schools of thought have evolved over
the years and as economic conditions change, the Caribbean
region must remain flexible when devising the most
appropriate economic policies. We hope that this issue of
the Caribbean Investment iQ gives you, our readers, a better
understanding of the role of government in the Caribbean
economies as the region continues to grapple with the issue
of striking the balance and attaining the optimal level of
government intervention.
We extend our sincere appreciation to all our special feature
experts for sharing their knowledge with us.
...governments throughout the world were forced to boost expenditure
to help anchor short-term expectations and improve sentiment.
We have an expert line up of special feature writers who
will look at our theme – ‘Striking the Balance: The Optimal
Level of Government Intervention’ for this publication of the
Caribbean Investment iQ magazine, and we give special focus
on the Caribbean region.
Dr. Marlene Attzs, Deputy Dean (Distance and Outreach),
Faculty of Social Science and Lecturer at the University
of the West Indies, presents the historical perspective on
government intervention in the Caribbean region, and to
answer the question of how did we come to rely so heavily on
the government. Dr. Attzs outlines some of the policies that
would have been introduced to encourage the invisible hand
to dictate the market as opposed to the free market system.
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Caribbean Investment iQ December 2013