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

Author/Editor: Blavy, Rodolphe
Publication Date: October 01, 2006
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: 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.
Series: Working Paper No. 06/235
Subject(s): Public debt | Jamaica | Productivity | Economic growth | External debt | Public investment | Resource allocation | Economic models

Author's Keyword(s): Jamaica | growth | external debt | public debt | growth accounting | productivity
Publication Date: October 01, 2006
ISBN/ISSN: 0 / 1934-7073 Format: Paper
Stock No: WPIEA2006235 Pages: 25
US$18.00 (Academic Rate:
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