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Public Investment and Growth in the Eastern Caribbean

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  • Mr. Shaun K. Roache

Abstract

This paper quantifies the effect of public investment on growth in the ECCU. The results, emerging from panel vector autoregressions, indicate that the return on public investment, as defined by Perreira (2000), is very likely negative. This means that the total change in real output induced by one EC dollar of public investment, due to its short-run impact on demand, or the longer-run impact on supply, is below one EC dollar. Public investment shocks also appear to appreciate the real exchange rate, suggesting that the short-run demand impact is larger than the long-run supply response.

Suggested Citation

  • Mr. Shaun K. Roache, 2007. "Public Investment and Growth in the Eastern Caribbean," IMF Working Papers 2007/124, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/124
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    References listed on IDEAS

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    11. Mr. Shaun K. Roache, 2006. "Domestic Investment and the Cost of Capital in the Caribbean," IMF Working Papers 2006/152, International Monetary Fund.
    12. Alfredo M. Pereira & Maria de Fátima Pinho, 2006. "Public Investment, Economic Performance and Budgetary Consolidation: VAR Evidence for the 12 Euro Countries," Working Papers 40, Department of Economics, College of William and Mary.
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    Cited by:

    1. Garikai Makuyana & Nicholas M. Odhiambo, 2019. "Public and private investment and economic growth in Malawi: an ARDL-bounds testing approach," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 673-689, January.
    2. Mungroo, Albert & Ooft, Gavin & Tjon Kie Sim-Balker, Peggy, 2014. "Government Expenditure in Suriname: A Stimulus or Impediment to Growth," EconStor Preprints 215531, ZBW - Leibniz Information Centre for Economics.
    3. Mr. Hunter K Monroe, 2009. "Can the Eastern Caribbean Currency Union Afford to Grow Old?," IMF Working Papers 2009/038, International Monetary Fund.
    4. Nlandu Mamingi & Patrice Borda, 2015. "The Determinants of Economic Growth in The Countries of the Organization of the Eastern Caribbean States [Croissance économique-Econométrie ARDL]," Post-Print hal-02532219, HAL.

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    Keywords

    WP; growth rate;

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