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This paper quantifies the savings obtained from risk pooling with a Regional Stabilization Fund (RSF) for the Eastern Caribbean Currency Union. A Monte Carlo experiment is used to estimate the size of a RSF conditional on probabilities of depletion under specific saving-withdrawal rules. Results indicate that regional risk pooling requires about half of the saving amount relative to the sum of individual-country savings. In addition to reducing the amount of saving requirements for stabilization, the RSF can improve welfare by realocating government consumption savings during booms towards public investment during recessions, resulting in an increase of public investment in the range of 0.5-1.5 percent of GDP per year depending on the country, with positive growth dividends. Moreover, the RSF also reduces the dispersion of public debt outcomes in light of the cross-country cyclical synchronicity of output and revenue, thereby strengthening the stability of the regional currency board.

Macroeconomics --- Economics: General --- Public Finance --- Money and Monetary Policy --- Mathematical Methods and Programming: General --- General Financial Markets: Government Policy and Regulation --- National Budget, Deficit, and Debt: General --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- National Government Expenditures and Related Policies: General --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy --- Macroeconomics: Consumption --- Saving --- Wealth --- Economic & financial crises & disasters --- Economics of specific sectors --- Public finance & taxation --- Monetary economics --- Public investment spending --- Expenditure --- Public debt --- Standing facilities --- Monetary policy --- Government consumption --- National accounts --- Currency crises --- Informal sector --- Economics --- Public investments --- Expenditures, Public --- Debts, Public --- Consumption --- Antigua and Barbuda