ABSTRACT
This chapter examines the structure of expenditures in a relatively detailed manner. It discusses public expenditures in Jamaica are inflexible downwards, both because public expenditures in Jamaica to a large extent are allocated to "projects" spanning over several years and simply because it may be politically difficult to cut expenditures. The chapter explores the consequences of downwardly inflexible expenditures and demonstrates this was a characteristic of public expenditures during the Manley period. It traces the use of the revenue emanating from the bauxite levy and shows that such a situation may be analyzed using the tools from "Dutch Disease" exercises. The implementation of the bauxite levy had a tremendous impact on Jamaica's public budget. The implementation of the bauxite levy in 1974 caused an immediate and significant upswing in public expenditures. The subsequent contraction of the mining sector did not, however, cause expenditures to fall—at least not to the same extent.
