Training Program Course

This online course explains how to analyze the relation between public investment, growth, and public debt dynamics using two dynamic structural models: the Debt, Investment, and Growth (DIG) model and the Debt, Investment, Growth and Natural Resources (DIGNAR) model. The course presents the key pieces of these models (the investment-growth nexus, the fiscal adjustment, and the private sector response) and their interactions. It elaborates on important factors that may shape these effects such as the type of financing, the rate of return of public capital, the efficiency of public investment, and the capacity of governments to mobilize revenues.
 

The DIG and DIGNAR models have complemented the debt sustainability analyses done by the IMF and the World Bank, with over 65 country applications in the context of Fund-supported programs and surveillance work. They have helped inform policy analysis, on issues not only related to public investment surges but also to fiscal consolidations, cash transfers to poor households, the mix of public current and capital expenditures, the efficiency of public spending and tax administration, and the collapse of commodity prices, among other areas. The course illustrates some of these applications.