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

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 finance public investment would be more supportive to economic growth in the short run, compared to a tax hike without a cap or domestic borrowing. On the hand, the DIGNAR model is an extension of the DIG model by adding the natural resource sector. This model is used to draw interesting policy implications on the sovereign fund management.

The focus of the course was on how to read simulation results. After explaining the framework of the models, the course uses charts extensively to explain the interaction between public investment, growth, and the fiscal policy response. The instructors did an excellent work in presenting the material without relying on advanced mathematics. Economic jargons were also well explained in the context using plain English.

One of the problems with the course was the limited discussion on the forum. I had no response from the staff after raising a question.

Overall, I have learned a lot about the interaction the economy and policy. So, this short course is highly recommended to anyone interested in macroeconomics and policy.