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Author/Editor:
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Greenidge, Kevin ; Craigwell, Roland ; Thomas, Chrystol ; Drakes, Lisa
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Publication Date:
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June 01, 2012
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Electronic Access:
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Free Full text
(PDF file size is 1,200KB).
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Adobe Acrobat Reader
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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
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Summary:
This paper addresses the issue of threshold effects between public debt and economic growth in the Caribbean. The main finding is that there exists a threshold debt to gross domestic product (GDP) ratio of 55–56 percent. Moreover, the debt dynamics begin changing well before this threshold is reached. Specifically, at debt levels lower than 30 percent of GDP, increases in the debt-to-GDP ratio are associated with faster economic growth. However, as debt rises beyond 30 percent, the effects on economic growth diminishes rapidly and at debt levels reaching 55-56 percent of GDP, the growth impacts switch from positive to negative. Thus, beyond this threshold, debt becomes a drag on growth.
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Order a print copy
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Series:
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Working Paper No. 12/157
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Subject(s):
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Caribbean | Economic growth | Public debt | Sovereign debt
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Author's Keyword(s):
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Debt Problems | Debt Threshold | Panel Data | Threshold Regressions |
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English
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Publication Date:
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June 01, 2012
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Format:
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Paper
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Stock No:
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WPIEA2012157
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Pages:
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22
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Price:
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US$18.00 )
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Please address any questions about this title to
publications@imf.org
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