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Public Debt and Productivity; The Difficult Quest for Growth in Jamaica


  • Rodolphe Blavy


The paper analyzes Jamaica's experience of low growth despite consistently high investment. Cross-country analysis provides evidence of a significant and negative relationship between total public debt and productivity growth. Looking at the specific channels through which high debt affects productivity growth and the allocation of resources in Jamaica, the study finds that high public debt has been associated with macroeconomic uncertainty and an output structure that relied excessively on a few maturing sectors with limited scope for productivity growth. Furthermore, public investment has been crowded out by debt service, further adversely affecting productivity growth.

Suggested Citation

  • Rodolphe Blavy, 2006. "Public Debt and Productivity; The Difficult Quest for Growth in Jamaica," IMF Working Papers 06/235, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/235

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    References listed on IDEAS

    1. Catherine Pattillo & Hélène Poirson & Luca Antonio Ricci, 2011. "External Debt and Growth," Review of Economics and Institutions, Università di Perugia, vol. 2(3).
    2. Toan Quoc Nguyen & Benedict J. Clements & Rina Bhattacharya, 2003. "External Debt, Public Investment, and Growth in Low-Income Countries," IMF Working Papers 03/249, International Monetary Fund.
    3. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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    1. repec:eco:journ1:2017-05-6 is not listed on IDEAS
    2. Kelbesa Megersa & Danny Cassimon, 2015. "Public Debt, Economic Growth, and Public Sector Management in Developing Countries: Is There a Link?," Public Administration & Development, Blackwell Publishing, vol. 35(5), pages 329-346, December.
    3. Klaus-Stefan Enders, 2007. "Egypt—Searching for Binding Constraints on Growth," IMF Working Papers 07/57, International Monetary Fund.
    4. Shijaku, Gerti, 2014. "Fiscal policy, output and financial stress in the case of developing and emerging European economies: a threshold VAR approach," MPRA Paper 79139, University Library of Munich, Germany.
    5. António Afonso & João Tovar Jalles, 2014. "Fiscal composition and long-term growth," Applied Economics, Taylor & Francis Journals, vol. 46(3), pages 349-358, January.
    6. Wani, Nassir Ul Haq & Kabir, Habib, 2016. "An evaluation of relationship between public debt and economic growth: A study of Afghanistan," MPRA Paper 75538, University Library of Munich, Germany, revised 10 Nov 2016.
    7. Khalil Ahmad & Amun Khalid & Zoya Noor, 2016. "The role of IMF in Pakistan’s economy," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 5(3), pages 126-134, September.
    8. Shijaku, Gerti & Gjokuta, Arlind, 2013. "Fiscal policy and economic growth: the case of Albania," MPRA Paper 79090, University Library of Munich, Germany.
    9. World Bank, 2011. "Jamaica - Country Economic Memorandum : Unlocking Growth," World Bank Other Operational Studies 2756, The World Bank.


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