CARIFORUM and UK EPA Study

of the regional labor force, liquidity (interest rate) and volume of trade correlate with the general price level (see the Table below).

Dependent variable: INFL

Excluded

Chi-sq

df

Prob.

LOG(AVGTRD)

12.15030 3.039655 20.92624 7.662267 2.028804 23.83626 12.72403 11.19217

2 2 2 2 2 2 2 2

0.0023 0.2187 0.0000 0.0217 0.3626 0.0000 0.0017 0.0037

LOG(EXR)

GDPG

INT

LOG(K)

LFG

LOG(OP)

LOG(EXP01)

All

105.9468

16

0.0000

All the variables collectively have some impact on regional liquidity, especially, the growth of the labor force and capital formation (see the Table below).

Dependent variable: INT

Excluded

Chi-sq

df

Prob.

LOG(AVGTRD)

1.081278 2.053449 1.069736 0.035388 5.714103 8.279082 0.812831 1.257415

2 2 2 2 2 2 2 2

0.5824 0.3582 0.5857 0.9825 0.0574 0.0159 0.6660 0.5333

LOG(EXR)

GDPG

INFL

LOG(K)

LFG

LOG(OP)

LOG(EXP01)

All

27.61452

16

0.0351

All the variables have some amount of influence on liquidity, but the growth of the labor force and capital formation exhibit a dominant presence. The table below shows that all the variables Granger-cause capital formation without any of the variables showing significant dominance.

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