Grow with discipline

New York economics professor Peter Blair Henry says Jamaica has managed to keep within acceptable inflation rates


Wednesday, June 12, 2019

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“Combine focus and flavour to make inflation targeting work” was the practical yet very stern warning from Peter Blair Henry, professor of economics and finance and head of New York University's (NYU) Stern School of Business.

Speaking to an engaged audience at the Bank of Jamaica's (BOJ) first in a two-part economics seminar series on “Demystifying Inflation”, Blair Henry also stressed the need for discipline as a key strategy for targeting inflation in Jamaica. The first seminar, which took place last week at the BOJ auditorium in Kingston, also featured three other speakers. Seminar number two is set for tomorrow, June 13, at the same venue.

Blair Henry asserted that as a part of this focus and flavour, discipline should be viewed and undertaken in a way where there is a “sense of sustained commitment, executed with a pragmatic strategy, vigilance and flexibility”.

This he believes is what is going to enable Jamaica to get to achieve its vision of long-term prosperity.

The New York-based professor noted that in the past, Jamaica has severely suffered from a lack of fiscal discipline.

“After 57 years of independence, only within the last six years was the country able to employ a type of serious fiscal management.

“The last six years, which so far have been consistent, must, however, be commended”, he offered.

Blair Henry pointed out in his presentation that: “Prior to 2013, there was no proper fiscal management, such as IMF agreements, to aid with steering the country in the right path. At the start of the independence era, inflation stood at 4.4 per cent and catapulted to 27 per cent by 1980. The subsequent years of this period saw inflation rise and fall with no stable rate up until at present. This therefore implies that the lessons that we were taught, the struggles and pains that we have endured over the years, must be referenced as reminders of where we are coming from as a nation fiscally. this should then drive us to be disciplined to the cause.”

The economics professor then stressed that the discipline needed for growth must be strongly buffered with the element of continuity.

“Currently, Jamaica has managed to keep within acceptable inflation rates along the parameters of its 4-6 per cent range. The mantra of the BOJ is to work to keep inflation at checked levels and not to take for granted the low- stable and predictable rates that we now enjoy.”

With this said, Henry advised that the public must therefore hold the BOJ and the country's legislative officials accountable to inflation targeting, so that they will be compelled to create more policies that will foster growth and build the economy.

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