Private Investment and Macroeconomic Environment in the South Pacific Island Countries: A Cross-Country Analysis
Jayaraman, T K | October 1996
Abstract
The paper undertakes an empirical investigation of key macroeconomic factors affecting private investment in the South Pacific developing member countries (SPDMCs), namely Fiji, Kiribati, Solomon Islands, Tonga, Vanuatu, and Western Samoa. The study finds that instability in the real exchange rate had a sizeable adverse effect on private investment. This particular instability is a product of many uncertainties, reflecting the SPDMCs' structural rigidities as well as fiscal and monetary imbalances. On the other hand, growth in output had an expansionary effect on private investment, although of a low magnitude, while public investment had a contractionary influence. The SPDMCs' macroeconomic management needs vast improvements. Annual fiscal balances should be reduced and rising recurring expenditures that encroach upon domestic savings should be kept under control. These measures would contribute to maintaining low inflation and reducing the variability in inflation and the real exchange rate.
Citation
Jayaraman, T K. 1996. Private Investment and Macroeconomic Environment in the South Pacific Island Countries: A Cross-Country Analysis. © Asian Development Bank. http://hdl.handle.net/11540/3163. License: CC BY 3.0 IGO.ISSN
0117-5492
Keywords
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Exports
Economic development projects
Economic policy
Economic forecasting
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Citable URI
http://hdl.handle.net/11540/3163Metadata
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