Public Debt and Productivity; The Difficult Quest for Growth in Jamaica
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.
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- 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.
- Catherine Pattillo & Hélène Poirson & Luca Antonio Ricci, 2011.
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"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
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Wiley Blackwell, vol. 58(2), pages 277-97, April.
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