that i have discussed - shallower recessions and structural change in the labor market - likely contain some elements of the truth. however, the structure of the economy is always in flux to some extent, and i think it probable that experiencing two hesitant recoveries in a row was largely a matter of coincidence. in each case, idiosyncratic factors that were specific to each episode combined in a way that inhibited the economic expansion in important sectors when other fundamentals would have favored a more typical cyclical upturn. i will discuss these factors now. idiosyncratic factors inhibiting recoveries the strength of a recovery may be related to the nature of the shocks that led the economy into recession. in contrast to earlier recessions, which were often sparked by tightening monetary policy, the 1990 recession was triggered by a pullback in aggregate demand not induced by monetary policy. in 1990, oil prices increased and consumer confidence dropped sharply ; both occurrences were at least partly related to the iraqi invasion of kuwait. in response, consumer spending dropped sharply. although the federal reserve had tightened policy in the late 1980s to restrain price pressures, it was loosening again by mid - 1989. similarly, before the 2001 downturn, the federal reserve was not aggressively tightening. rather, the 2001 recession seems to have been kicked off by unreasonable expectations about the profitability of investment in technology related to the internet. one manifestation of these overly optimistic expectations was that the nominal share of high - tech investment in overall equipment and software spending rose from about 35 percent in the mid - 1990s to almost 45 percent by the end of 2000. by the time more - sober assessments of the profitability of the high - tech sector came to the fore, huge sums of money had been sunk into capital equipment and software and into new enterprises. a serious reconsideration of these expenditures contributed to a sharp retrenchment of business investment. although the causes of these two most recent recessions were clearly different, they were similar along one important dimension : both were related to changes in the subjective appraisals by persons and businesses of fundamental economic prospects, and to heightened uncertainty about those prospects. in real time, it is extraordinarily difficult to determine the likely severity and duration of these types of shocks. using monetary policy to counter a shock of this nature is not as straightforward as reversing an earlier tightening. in retrospect, it is clear that during the two most recent recoveries these subjective views improved and uncertainty

will help to influence african, caribbean and pacific governments in their advocacy for innovative sources of development finance to be a front - burner issue on the international economic agenda. ladies and gentlemen, it is no secret that small vulnerable economies in the caribbean have grappled with external shocks of varying magnitudes and duration over the past two decades. these shocks include a compression of aid flows, dismantling of preferential trade arrangements for sugar and bananas, interventions related to anti - money laundering and combating the financing of terrorism. more recently, the caribbean has been gradually recovering from the shock of the global financial crisis, which originated in the united states and spread to europe, the region ’ s two closest trading and investment partners. the untold story, however, is that the combined influence of these multiple shocks has led to a dramatic and fundamental shift in the composition of external financing flows to the caribbean. bis central bankers ’ speeches in my respectful view, the most significant change in the regional pattern of external resource flows stemmed from the sharp compression in official development assistance ( oda ). flows of oda to many caribbean countries began falling in the 1990s, as donors redirected their aid priorities to the newly emerging commonwealth of independent states and the least developed countries. this is certainly ironic because the eighth mdg recognizes that developing countries require more generous development aid to have the best chances of reducing poverty and accelerating development within the stipulated 15 year timeframe. faced with declining aid resources, many caribbean governments resorted to more expensive commercial borrowing to bridge their funding gaps. this, combined with the growing inability of regional governments to generate high enough primary fiscal surpluses for debt servicing, contributed to a large public debt overhang. gross public debt in the caribbean climbed rapidly from 65 percent of gdp in 1998 to a peak of almost 100 percent of gdp in 2002, before falling to a still elevated 80 percent of gdp in 2012. the accumulation of public debt was even faster in the eastern caribbean, moving from just over 60 percent of gdp in 1998 to a high of almost 120 percent of gdp in 2004, before falling to 95 percent of gdp in 2012. generally, a public debt ratio of over 90 percent of gdp is considered exceptionally high. by this measure, four countries in the caribbean are projected to hold exceptionally high public debt in 2013 : jamaica ( 140 percent ), st. kitts & nevis ( 139 percent ), grenada ( 109 percent ), and antigua & barbuda ( 93 percent ). another six