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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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    2. Christophe Kamps, 2005. "The Dynamic Effects of Public Capital: VAR Evidence for 22 OECD Countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 533-558, August.
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    7. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    8. Mr. Shaun K. Roache, 2006. "Domestic Investment and the Cost of Capital in the Caribbean," IMF Working Papers 2006/152, International Monetary Fund.
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    10. Ruth A. Judson & Ann L. Owen, "undated". "Estimating Dynamic Panel Data Models: A Practical Guide for Macroeconomists," Finance and Economics Discussion Series 1997-03, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    11. 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, Economics Department, William & Mary.
    12. International Monetary Fund, 2007. "Eastern Caribbean Currency Union: Selected Issues," IMF Staff Country Reports 2007/097, International Monetary Fund.
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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. 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.
    4. Navarrete José Luis & Descalzi Ricardo Luis & Barone Sergio Víctor & Acedo Colli Luis Abel, 2025. "Inversión Privada como Motor del Crecimiento: Evidencia con un Panel Dinámico Heterogéneo," Asociación Argentina de Economía Política: Working Papers 4823, Asociación Argentina de Economía Política.
    5. Mr. Hunter K Monroe, 2009. "Can the Eastern Caribbean Currency Union Afford to Grow Old?," IMF Working Papers 2009/038, International Monetary Fund.

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