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A Discourse on Debt and Economic Growth in the Caribbean Community

This discourse explores the debt situation in Caribbean countries and its impact on economic growth. It discusses the contribution of debt to economic growth and the concept of debt sustainability. It also examines the relationship between interest rates, economic growth rates, and the required primary surplus. The discourse concludes with insights into the current state of debt and economic growth in the Caribbean.

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A Discourse on Debt and Economic Growth in the Caribbean Community

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  1. A Discourse on Debt and Economic Growth in the Caribbean Community by Professor Compton Bourne, PhD, O.E.

  2. CONTEMPORARY DEBT SITUATION CARIBBEAN COUNTRIES ARE HIGHLY INDEBTED Debt as % of GDP

  3. y = af(k) s Contribution of Debt to Economic Growth n+w=k

  4. Debt Sustainability • Old Version Focuses on Debt Service Relative to Fiscal Revenues and Exports of Good and Services. Data Indicative of Problem of Diminution of Debt Capacity. • Modern Version Focuses on Primary Surplus. The Easterly Formulation – ∞ • ∫ e ‾rt (Tt + At - Gt) dt ≥ Do 0 • where T is tax revenues, • A is Net debt inflows, • G is government expenditures, • D is public debt stock, • and r is the discount rate

  5. Debt Sustainability p/(r-g) = Do/Yo Tt + At - Gt) /Yt = (r-g) Dt / Yt Interest Rates Rose and Economic Growth Rates Decreased 1997-2004 in the Caribbean causing the Required Primary Surplus to Increase

  6. Debt SustainabilityAnnual Growth Rate of Real GDP%

  7. Towards a Conclusion THE END

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