Last week the Private Sector Commission (PSC) urged the government to increase its spending to stimulate the needed aggregate demand to sustain business activity. Mr Eddie Boyer, Chairman of the PSC, urged government to fast-track awarding of contracts to speed up business activity. The Minister of Business, Mr Dominic Gaskin, was also questioned on what could be done over the next few months to stimulate business activities. We addressed this issue a few months ago in a column:
“The cycle, the trend and Budget 2016…and beyond.” There, the type of business activities that government spending is likely to stimulate was spelled out.
Let us first observe the trends in government spending and private sector investment from 2007 to 2015. Unfortunately we don’t yet have the data for these variables up to half year 2016, but a clear pattern is evident that tends to support the