Working Paper Series: Special Edition of 2016 to 2018 Interns

Figure 4: Public Debt to GDP over the Period 1993 to 2016

100.00 120.00 140.00 160.00

0.00 20.00 40.00 60.00 80.00

1993

1994

1995

1996

1997 Anguilla Dominica

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Antigua and Barbuda

Grenada

Montserrat

St Kitts and Nevis

St Lucia

St Vincent and the Grenadines

Source: Eastern Caribbean Central Bank

3.0 Literature Review Issues associated with the impact of natural disasters on the economy are still relatively under researched. However, in recent years there have been an increase in the literature on natural disasters in relation to economic growth and debt. Skidmore and Toya (2002) investigates whether natural disasters promotes growth in the long run and they conclude that disasters may stimulate growth in the long run. This conclusion is based on Schumpeter’s process of creative destruction and therefore they postulate that these occurrences may provide an opportunity to update the capital stock and thereby encourage the adoption of new technologies. In an empirical paper, Loayza et al (2009) examines the impact of natural disasters on growth in the long run over the period 1961-2005 by disaggregating the type of disaster and the different economic sectors in developed and developing countries. Using a dynamic Generalised Method of Moment (GMM) panel estimator for 94 developed and developing countries, the results reveal that disasters affect growth but not always negatively and the impact varies across the different types of natural disasters and economic sectors.

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