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International Monetary Fund

Public Debt, Investment, and Growth: The DIG and DIGNAR Models

International Monetary Fund via edX


Over the past decade, the DIG and DIGNAR models have gained wide acceptance for policy work. They have complemented the analyses done with the IMF and World Bank Debt Sustainability Framework, with over 65 country applications in the context of Fund-supported programs and surveillance work. They have helped inform policy analysis, based on qualitative and quantitative scenario analyses, 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 others. The course will illustrate some of these applications and explain how to interpret the output of these policy scenario analyses.

Taught by

Giovanni Melina and Felipe Zanna


4.0 rating, based on 1 Class Central review

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  • This excellent course taught the interaction between macroeconomics and policy, by using simulations. The DIG model captures the effects of a surge in public investment on growth and public debt. For example, it showed that external borrowing to f…

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