Efficiency-adjusted Public Capital and Economic Growth in Guyana: A Cointegration Analysis

摘要

Using data for Guyana that spans the period 1980 to 2017, this study assessed the impact of efficiency-adjusted public capital on the country's overall economic growth and expenditures for private investment. This paper contributes to the literature in four ways. First, it constructed an efficiency-adjusted and unadjusted public capital stock series for Guyana, a less developed country within the Caribbean Community, using an amended perpetual inventory model. Second, with the aid of a modified Cobb-Douglas production function, the study identified a positive connection between the efficiency-adjusted public capital stock and growth in the economy. Third, the paper shows that the adoption of the country's Economic Recovery Program helped to boost the impact of public capital formation on the economy's output. Finally, the paper shows that public capital growth partially crowded-out private sector investment spending in the economy which can nevertheless expand with economic growth.