Public Investment and Growth in the Eastern Caribbean [electronic resource] / Shaun K Roache.
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TextSeries: IMF Working Papers; Working Paper ; No. 07/124Publication details: Washington, D.C. : International Monetary Fund, 2007Description: 1 online resource (20 p.)ISBN: 1451866887 :ISSN: 1018-5941Subject(s): Capital Expenditure | Growth | Private Capital | Private Investment | Rate of Return | Antigua and Barbuda | Ireland | Italy | Saint Vincent and the Grenadines | United StatesAdditional physical formats: Print Version:: Public Investment and Growth in the Eastern CaribbeanOnline resources: IMF e-Library | IMF Book Store 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.
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.
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